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1    and  HEALTH 
'         INSURANCE 


THE  INSURANCE  r;STITU1  E 
OF  HARTFORD.  In^    :  ioraitu 

NINETEEN  FifTEEN 


Accident  and  rlealtn  Insurance 

A  series  of  Lectures  aeliverea  before 

The  Insurance  Institute 

of   Hartford 


Edited  and  ComJ)iled  by 
H.  PI  Dunham  and  J .  E.  Rnodes,  2nd 


HARTFORD.  CONNECTICUT 

Tne  Insurance  Institvite  of  Hartford 
Incorf)oratGd 


1915 


^^ 


c^ 


CONTENTS 

Page 

The  Pioneers,              4 

William  John  Vian, 5 

James  Goodwin  Batterson, 8 

The  Scope  of  Accident  Insurance,  by  J.  E.  Rhodes,  2nd,      .  10 

The  History  and  Development  of  Accident  Insurance, 

by  W.  C.  Faxon, 19 

Accident  Underwriting,  by  B.  A.  Page, 30 

The  Accident  Policy,  by  A.  P.  Woodward,       .        .        .        .  46 

The  Insuring  Clause  of  Accident  Policies,  by  M.  P.  Cornelius,  58 

The  Relation  of  the  Medical  Examiner  to  Casualty  Insurance, 

by  E.  A.  Wells,  M.  D.,             65 

Personal  Accident  Adjustments,  by  J.  M.  Parker,  Jr.,     .        .  78 

Advertising  as  a  Factor  in  the  Selling  of  Accident  Insurance, 

by  Harry  Porter, 93 

Methods  of  Securing  and  Training  Agents  and  Developing 

Territory,  by  L.  N.  Denniston, 108 

Co-operation,  by  R.  A.  Person, 117 

Health  Insurance,  by  McL.  C.  Wilson,  M.  D.,           .        .        .  121 

Accident  Statistics  and  Reserves,  by  E.  S.  Fallow,           .        .  128 

The  Conduct  of  Suits  under  Insurance  Policies, 

by  Howard  P.  Dunham,            137 


rr^t^A  r-r\ 


Tne  Pioneers 


Two  names  are  consJ)icviously  J)reeminent  m 
connection  witn  tne  inceJ)tion  ana  aeveloJ)ment  of 
accident  vinaerwriting  m  tne  old  and  new  worlds, 
that  of  William  Jonn  Vian  m  Eurojje  and  James 
Goodwin  Batterson  m  America.  It  nas  been 
tnougnt  a|)t)ro|)riate  to  include  brief  aJ)^reciations 
of  these  two  men  m  tnis  comJ)ilation.  That  of 
Mr.  Vian  is  furnisked  Ly  Mr.  F.  Harding,  of 
Tne  Railway  Passengers  Assurance  Comf)any, 
London:  tkat  of  Mr.  Batterson  Ly  Mr.  G.  W. 
Ellis,  of  Tke  Travelers  Insurance  Comt)any, 
Hartford,    Connecticut. 


WILLIAM  JOHN  VIAN 


As  the  acorn  is  to  the  oak,  so  is  the  old  "Railway  Passen- 
gers" of  London  to  the  Accident  Insurance  world  of  to-day; 
and  William  John  Vian,  the  virtual  Founder  of  the  Company 
may  rightly  be  entitled  the  Father  of  Accident  Insurance  as 
we  know  it. 

Mr.  Vian,  who  was  born  in  1827  and  entered  the  Company's 
service  in  1849,  became  its  Secretary  in  1852,  at  which  time 
the  Company  was  transacting  only  Insurance  against  Railway 
Accidents,  for  which  purpose,  solely  —  as  its  name  implies  — 
it  was  originally  founded  in  1849. 

The  system  of  Railway  Accident  Insurance  was,  as  it 
still  is  by  this  Company  in  the  British  Isles,  carried  on  by 
means  of  tickets  for  individual  journeys,  purchased  at  Railway 
Stations  and  costing  from  one  penny  to  sixpence  and  by  period- 
ical tickets.  This  system  speedily  became  popular  and  made 
its  way,  but  Mr.  Vian  soon  realised  the  fact  that  it  was  too 
narrow  to  constitute  a  paying  commercial  enterprise.  More- 
over the  Capital  (fulh^  subscribed)  of  a  Million  Pounds  was  out 
of  all  proportion  to  the  necessities  of  a  business  of  such  restricted 
scope,  even  when  it  should  have  attained  its  full  possible  growth. 

Immediately  upon  his  appointment  as  Secretary,  there- 
fore —  that  is  in  1852  —  Mr.  Vian  persuaded  his  Board  to 
apply  to  Parliament  for  further  powers,  the  result  being  an 
Act,  passed  in  the  same  year,  enabling  the  Company  to  insure 
against  Accidents  of  all  kinds.  These  powers  Mr.  Vian  de- 
veloped year  by  year,  with  consummate  ability  creating  and 
meeting  the  demand  for  personal  Insurance  of  divers  types  and 
patterns. 

It  should  always  be  borne  in  mind  that  Mr.  W.  J.  Vian's 
Premium  Tables  for  Personal  Accident  Insurance  were  his 
own  creation;  and  it  is  a  remarkable  evidence  of  his  genius 
that  those  tables,  founded  of  necessity  largely  on  his  innate 
judgment,  have  borne  the  test  of  time;  are  still  the  standard 
in  England;  and  have  formed  the  basis  of  Accident  rates  in 
America  and  all  over  the  world.  As  modern  Companies,  one 
after  another,  come  into  existence  and  start  business  by  the 
simple  method  of  drawing  upon  their  predecessors  for  their 
Rates  and  Policies,  how  many  of  their  originators  give  a  thought 
to  the  'Tons  et  Origo,"  William  John  Vian! 


"W^ell,  one  Coiiipar^yv.  at"  all  events,  owns  its  parentage; 
and  this  is  the  story :  '—^' 

In  the  early  sixties  the  late  Mr.  James  G.  Batterson  vis- 
ited England,  when  he  saw  the  "Railway  Passengers"  Insurance 
Tickets  advertised,  and  bought  one.  Being  a  practical  man, 
and  ready  to  learn  anything  worth  knowing  from  the  Old 
World,  he  considered  whether  here  was  not  something  suitable 
for  acclimatization  in  the  New.  The  result  of  his  cogitations 
was  that  he  called  upon  Mr.  Vian  and  found  himself  received 
with  the  utmost  friendliness,  and  was  afforded  by  Mr.  Vian 
the  fullest  information  with  regard  to  his  Company's  opera- 
tions, and  supplied  with  copies  of  all  papers  constituting  the 
machinery  in  use.  The  personal  result  of  this  was  the  creation 
of  a  mutual  regard  which  lasted  the  whole  of  their  lives.  The 
public  result  was  that  Mr.  Batterson  became  the  founder 
and  first  President  of  the  "Travelers"  of  Hartford,  whose 
phenomenal  success  is  of  worldwide  notoriety.  Mr.  Vian 
always  took  the  greatest  interest  in  the  "Travelers,"  looking 
upon  it  as  the  daughter  of  his  own  Company,  while  Mr.  Batter- 
son on  his  part  always  took  an  equal  interest  in  the  fortunes 
of  what  he  recognized  as  the  parent  Company.  This  interest 
has  been  happily  continued  by  Mr.  Batterson's  successor, 
Mr.  Sylvester  C.  Dunham,  who  a  few  years  back  sent  to  the 
"Railway  Passengers"  the  portraits  of  Mr.  Batterson  and 
himself,  which  now  hang  among  other  treasured  portraits 
in  the  Company's  new  and  handsome  London  Offices,  Mr. 
Dunham's  bearing  his  signature  and  the  following  graceful 
inscription :  — 

"With  best  wishes  for  the  continued  prosperity 
of  the  original  Railway  Passengers  of  England  the 
progenitor  of  the  Travelers  of  America." 

Seeing  the  portraits  of  Mr.  W.  J.  Vian  and  Mr.  J.  G.  Batter- 
son side  by  side,  one  cannot  help  being  struck  by  quite  a  re- 
markable resemblance  between  the  two  powerful,  massive, 
heads  with  their  full  beards.  This  is  not  a  little  curious  and 
interesting. 

Personally,  Mr.  W.  J.  Vian  was  kindly,  genial,  and  liberal- 
minded  —  qualities,  which,  applied  to  his  Company's  busi- 
ness, contributed  in  a  very  large  degree  to  its  success.  His 
relations  with  his  Staff  were  significantly  indicated  by  the 
fact  that  he  was  never  referred  to  by  the  formal  title  of  "Mana- 
ger" or  "Secretary"  but  always  as  the  "Gov'nor,"  a  familiar 
title,  suggesting  a  blend  of  respect  and  affection,  and  one  to 
which  there  could  be  no  successor. 

There  are  not  many  remaining  in  the  "Railway  Passengers" 
who  were  associated  with  William  John  Vian:  the  writer  of 
these  all  too  inadequate  notes  is  one  of  the  few,  and  he  has  a 


very  vivid  recollection  of  the  sense  of- loss, cynd  void  crqat^d  by 
his  Chief's  death  in  1890,  after  a  r'eign  — ^^  horiourable  and 
successful  —  of  38  years. 

Although  he  had  the  satisfaction  and  happiness  of  seeing 
the  fruit  of  his  labours  in  a  liberal  degree,  William  John  Vian 
can  hardly  have  known  how  big  he  was  building  —  can  hardly 
have  forecast  in  his  mind  the  immense  structure  which  would 
be  raised  on  his  foundation.  Surely,  his  best  epitaph  is  that, 
in  St.  Paul's  Cathedral,  of  its  Architect,  Wren:  — 

"Si  Monumentum  Requiris,  Circumspice." 


JAMES  GOODWIN  BATTERSON 


James  G.  Batterson,  the  pioneer  of  accident  insurance 
in  the  new  world ,  the  founder  and  for  thirty-eight  years  the  Presi- 
dent of  The  Travelers  Insurance  Company,  was  bom  in 
Bloomfield,  Connecticut,  February  23,  1823,  and  died  Sep- 
tember 18,  1901.  Prevented  by  circumstances  from  obtaining 
a  college  education  he  went  to  school  with  himself,  working 
hard  at  his  trade  as  a  printer  by  day,  he  studied  the  classics, 
sciences  and  mathematics  at  night,  and  he  kept  on  developing 
and  perfecting  himself  to  the  end  of  his  life.  He  read  law  with 
Origen  S.  Seymour,  afterwards  Chief  Justice  of  Connecticut, 
then  he  went  to  marble  cutting  with  his  father.  He  came  to 
be  a  great  builder  in  granite,  a  geologist,  a  mineralogist,  and  an 
engineer.  He  loved  to  read  and  translate  Homer  and  Virgil. 
He  made  himself  familiar  with  French,  Italian  and  Spanish, 
and  grappled  joyously  with  statistics  and  political  economy. 
During  the  Civil  War  he  was  Chairman  of  the  Republican 
State  Central  Committee  and  of  the  War  Committee,  and  a 
presidential  elector  of  the  electoral  college  which  elected  Abra- 
ham Lincoln  to  his  second  term  as  President. 

Mr.  Batterson's  chief  title  to  fame,  however,  was  as  the 
pioneer  of  accident  insurance  in  the  new  world,  and  The 
Travelers  of  Hartford,  the  largest  accident  company  in  the 
world,  is  the  greatest  monument  to  his  business  career. 

While  traveling  in  England,  Mr.  Batterson  purchased  a 
railroad  accident  policy  issued  by  The  Railway  Passengers 
Assurance  Company  of  London,  insuring  against  death 
and  injury  while  traveling  from  Liverpool  to  Leamington. 
The  idea  immediately  impressed  him  as  being  capable  of  a 
great  development,  and  that  it  was  as  feasible  against  all 
accidents  as  against  accidents  of  travel  only. 

After  consulting  William  John  Vian  of  The  Railway 
Passengers  Assurance  Society,  and  Cornelius  Walford,  author 
of  the  Encyclopedia  of  Insurance,  he  returned  home  fully 
determined  to  make  the  venture  of  this  new  form  of  insurance. 
The  Travelers  Insurance  Company  was  accordingly  chartered 
by  the  State  of  Connecticut  July  17,  1863,  and  issued  its  first 
policy  April  1st.  1864.  The  company  started  in  a  quiet  way 
and  only  with  the  greatest  care  and  perseverance  was  it  kept 
alive  during  the  first  few  years  of  its  existence. 

The  first  rates,  based  on  English  statistics,  were  found 
inapplicable  to  American  risks,  and  the  company  was  compelled 


to  experiment  with  great  caution  and  gather  itvS  own  experience. 
A  series  of  great  railroad  and  steamship  disasters  called  public 
attention  to  the  fact  that  accident  insurance  was  of  considerable 
value.  The  wreck  of  an  excursion  train,  among  whose  passen- 
gers a  considerable  number  carried  insurance  in  The  Travelers, 
almost  bankrupted  the  company,  but  at  the  same  time  gave  it 
its  first  great  impetus.  From  that  time  its  business  increased 
continuously. 

Mr.  Batterson  lived  to  see  the  company  which  he  had 
founded  become  the  largest  accident  and  liability  company 
in  the  world,  and  one  of  the  foremost  life  companies. 


1  ne  ScoJ)e  of  Accident  Insurance 


BY 

J.  E.  RHODES.  2nd 

The  Travelers  Insurance  ComJ)any 


JANUARY  15.  1915 


Until  within  very  recent  years  the  use  of  the  term  "ac- 
cident insurance"  in  this  country  has  been  associated  in  our 
minds  only  with  that  particular  branch  of  underwriting  which 
indemnifies  in  event  of  personal  injuries,  or  death,  caused  by  ac- 
cident. This  branch  has  come  to  be  classed  as  one  of  the  principal 
lines  of  "casualty  insurance,"  so  called.  While  I  do  not  intend 
to  take  any  exception  to  the  practical  use  of  these  terms,  still 
I  think  we  can  all  see  that  the  use  of  the  word  "accident"  and 
of  the  word  "casualty"  as  applied  to  any  special  branch  of 
insurance  is,  to  a  certain  extent,  an  inaccuracy,  and  is  sanc- 
tioned only  by  usage  rather  than  by  a  scientific  classification. 

All  insurance  is  essentially  a  provision  and  a  protection 
against  some  accident  or  casualty.  The  words  "accident" 
and  "casualty"  are  practically  synonymous.  When  we  look 
for  authoritative  definitions  of  the  two  words  we  find  that, 
among  other  definitions,  the  Standard  Dictionary  defines  an 
accident  as  "any  unpleasant  or  unfortunate  occurence  that 
causes  injury,  loss,  suffering,  or  death;  a  casualty;  mishap; 
as  a  railroad  accident]  the  travelers  insure  against  accident ^ 
The  same  authority  defines  casualty  as  "a  fatal  or  serious  ac- 
cident or  disaster;  accidental  death  or  disablement."  In  con- 
nection with  both  definitions  each  word  is  given  as  a  synonym  of 
the  other,  so  it  will  be  seen  that  there  is  little  or  no  theoretical 
distinction  between  the  two  terms,  and  the  inclusion  of  accident 
insurance  as  a  branch  of  casualty  insurance  is  merely  a  matter  of 
practical  usage. 

That  all  insurance  is  essentially  a  provision  against  the 
effects  of  some  loss  which  may  never  occur,  or  some  event  which 
though  bound  to  occur  is  uncertain  as  to  the  time  of  its  occur- 
rence, is  an  axiom  of  underwriting.  The  distinction  between 
events  which  may  never  occur  and  those  which  are  bound  to 
occur  is  intended  to  emphasize  the  difference  between  life  in- 
surance and  all  other  forms  of  insurance,  in  that  the  former 
is  a  protection  against  the  economic  effect  of  the  death  of  an 


♦This  talk  was  also  given  at  the  University  of  Pennsylvania,  Philadelphia,  on  Octo- 
ber 27,  1914. 


11 

assured,  an  event  certain  to  occur  but  uncertain  as  to  the  time 
of  its  occurrence,  based  on  the  principles  of  mortaUty,  interest 
and  accumulations,  while  all  other  forms  of  underwriting  are 
designed  to  protect  against  uncertain  events  which  may  never 
occur.  Thus,  in  the  broad  sense  of  the  word,  all  insurance  may  be 
considered  "accident  insurance." 

This  branch  of  underwriting  is  a  development  of  the  last 
half-century;  it  might  almost  be  said  that  it  is  a  development 
of  the  last  twenty-five  years,  because,  for  the  first  twenty-five 
years  or  so,  few  changes  were  made  in  the  contract,  while  for 
the  past  twenty-five  years  its  development  has  been  hindered 
only  by  the  lack  of  further  imagination  on  the  part  of  the  under- 
writer. It  may  be  stated,  however,  that  during  the  past  few 
years  accident  underwriters  have  been  giving  serious  con- 
sideration to  the  apparently  unwarranted  increases  in  benefits 
with  no  corresponding  increases  in  premium  charges,  and  that 
a  reaction  against  such  further  increases  is  noticeable  among 
conservative  underwriters. 

Any  thorough  study  of  accident  insurance  must  now  in- 
clude as  an  essential  part,  I  might  say  as  its  essential  part,  a 
consideration  of  the  problems  which  have  been  forced  on  casu- 
alty underwriters  by  workmen's  compensation  laws,  for  the 
underwriting  of  workmen's  compensation  insurance  is  in  its 
very  essence  a  problem  of  accident  underwriting.  The  funda- 
mental difference  between  the  workmen's  compensation  policy 
and  the  commercial  or  industrial  policy  lies  in  the  fact  that, 
in  the  underwriting,  the  compensation  policy  is  a  contract 
between  the  employer  and  the  insurance  company,  made  for  the 
benefit  and  protection  of  the  employee,  and  that  the  benefits 
are  not  a  matter  of  contract  but  of  statutory  regulation;  the 
commercial  or  industrial  policy  is,  as  we  well  know,  a  direct 
contract  between  the  insurer  and  the  assured,  the  terms  of 
which  are  a  matter  of  agreement  between  the  contracting  parties. 
The  workmen's  compensation  policy  had  its  prototype  in  the 
old  workmen's  collective  policy,  but  as  workmen's  collective 
insurance  was  never  written  to  any  considerable  extent  in  this 
country  it  can  hardly  be  considered  a  factor  in  accident  under- 
writing. 

Accident  insurance  is  of  British  origin,  but  of  American 
development.  Its  inception  is  attributed  to  the  dangers  appar- 
ently connected  with  railway  travel,  and  in  its  origin  the  pur- 
pose of  the  contract  was  to  indemnify  for  injuries  so  sustained. 
In  its  development  it  has  been  extended  so  as  to  cover  prac- 
tically all  accidental  injuries.  Like  all  legitimate  insurance 
contracts  it  depends  for  its  validity  on  the  legal  doctrine  of 
insurable  interest,  which,  in  brief,  is  that  an  assured  must  be 
able  to  show  some  direct  loss  from  the  occurence  of  an  event 
before  he  can  insure  against  the  consequences  of  it.  As  far 
as  the  accident  contract  relates  to  payments  to  beneficiaries 


12 

in  event  of  accidental  death,  the  contract  rests  on  the  same 
basis  as  the  life  contract,  for  it  is,  to  that  extent,  a  limited  form 
of  life  insurance;  as  to  dismemberment  and  disability  pay- 
ments, there  is  no  question  but  that  a  person  sustains  financial 
loss  by  reason  of  the  loss  of  a  member,  or  the  interruption  or 
cessation  of  his  earning  capacity  because  of  an  accident,  so 
the  presence  of  an  insurable  interest  as  the  basis  of  an  accident 
contract  is  assumed. 

Accident  insurance,  as  already  stated,  is  of  British  origin. 
It  was  intended  in  its  inception  to  provide  indemnity  for  ac- 
cidents sustained  in  the  course  of  railway  travel.  The  dangers 
incident  to  this  form  of  transportation  were  so  apparent  when 
it  came  into  general  use  that  this  form  of  underwriting  was 
devised  to  mitigate  the  financial  losses  caused  by  railway  ac- 
cidents. Although  several  corporations  were  formed  in  Eng- 
land prior  to  1849  for  the  purpose  of  writing  accident  insurance. 
The  Railway  Passengers  Assurance  Company,  formed  in  that 
3^ear,  was  the  first  company  to  grant  insurance  against  acci- 
dental injury,  and  is  therefore,  the  pioneer  accident  company 
of  the  world. 

The  records  show  that  several  companies  were  incorpor- 
ated in  Massachusetts  in  the  late  forties  of  the  last  century 
for  the  purpose  of  writing  health  insurance,  and  that  the  char- 
ters of  two  of  these  companies  were  amended  so  as  to  permit 
them  to  write  accident  insurance.  It  does  not  appear  that 
any  of  these  companies  ever  engaged  in  the  business  of  writing 
either  health  or  accident  insurance  to  any  extent,  so  the  fact 
of  their  incorporation  is  merely  a  matter  of  passing  historical 
interest. 

The  semi-centennial  of  accident  underwriting  in  America 
was  celebrated  in  Hartford  in  April  of  last  year.  I  will  allude 
briefly  to  the  coverage  of  the  personal  accident  policy  of  April 
1864  and  that  of  April  1914,  so  as  to  show  incidentally  the 
extension  of  the  contract.  The  purpose  of  accident  insurance, 
in  brief,  is  threefold.  To  the  extent  that  it  provides  for  in- 
surance in  event  of  accidental  death  it  is  a  limited  form  of  life 
insurance;  certain  indemnities  are  provided  for  certain  dis- 
memberments; weekly  indemnity  is  specified  for  total  or  par- 
tial disability  caused  by  accidental  injuries.  There  are  other 
features  in  the  modern  contract,  but  they  are  merely  subsidiary 
to  its  main  purpose.  The  poHcy  of  1864  provided  only  for  the 
payment  of  the  principal  sum  in  event  of  death,  and  the  pay- 
ment of  weekly  indemnity  for  total  disability  for  a  period  not 
exceeding  twenty -six  weeks.  That  of  1914  provides,  in  brief, 
for  the  pa3mient  of  the  principal  sum  in  event  of  death ;  for 
specific  sums  for  specific  dismemberments;  for  total  disability 
payments  during  the  continuance  of  total  disability  and  for 
partial  disability  payments  for  a  limited  period.  These  benefits 
are  doubled  for  certain  accidents. 


13 

The  problem  of  accident  insurance  in  its  application  to 
those  who  are  not  engaged  in  occupations  which  involve  any 
great  amount  of  occupational  dangers  is  easy  in  its  solution. 
It  is  merely  a  matter  of  individual  foresight  for  each  person 
so  situated  to  provide  for  himself  the  proper  protection.  It 
is  in  its  application  to  the  person  engaged  in  dangerous  occu- 
pations that  the  problem  of  accident  insurance  becomxcs  a 
pressing  social  problem.  Since  the  inception  of  scientific  acci- 
dent "underwriting  the  rates  have  been  based  on  occupational 
hazards,  so  that  the  person  who  is  engaged  in  a  non-hazardous 
occupation  pays  much  less  for  his  protection  than  the  person 
who  is  engaged  in  hazardous  work.  This  is  the  only  true  prin- 
ciple on  which  any  system  of  accident  underwriting  can  be  based. 

The  practical  result,  therefore,  of  this  principle  is  that 
the  person  engaged  in  an  occupation  with  little  or  no  danger 
inherent  in  it  can  carry  adequate  protection,  while  to  the  person 
who  is  engaged  in  hazardous  work,  and  to  whom  this  protection 
is  a  necessity,  the  cost  of  such  protection  is  almost  prohibitive. 
It  may  be  said,  in  fact,  that  the  cost  of  adequate  protection, 
is  prohibitive.  In  addition  to  this  the  amount  written,  both  as 
to  the  principal  sum  and  the  weekly  indemnity,  for  persons 
classified  in  the  hazardous  occupation  is  small,  and  the  companies 
which  cater  to  those  engaged  in  occvipations  of  lesser  hazard 
do  not  cultivate  the  business  of  those  engaged  in  hazardous 
occupations  to  any  extent. 

The  greater  portion  of  the  claims  paid  by  companies  whose 
business  is  largely  confined  to  policyholders  whose  occupations 
do  not  involve  any  particular  degree  of  hazard  is  for  non-occupa- 
tional injuries.  It  is  with  the  occupational  injury  that  the  social 
problem  of  accident  insurance  begins.  Companies  have  been 
formed  for  the  purpose  of  writing  accident  insurance  among 
the  wage-earning  classes,  their  business  being  termed  "industrial 
accident  insurance."  That  branch  of  the  business  relates,  how- 
ever, to  the  operation  of  the  companies  which  offer  to  workingmen 
the  opportunity  to  insure  against  accidents  on  the  so-called 
''industrial"  plan,  as  distinguished  from  commercial  and  other 
policies,  and  not  to  the  solution  of  the  social  problem  of  industrial 
accidents  and  the  mitigation  of  their  financial  losses. 

I  will  do  nothing  more  than  refer  to  the  subject  of  industrial 
accidents  as  an  incident  of  modern  industry,  and  pass  along  to 
the  discussion  of  the  problem  of  the  industrial  accident  in  its 
relation  to  accident  insurance.  The  catastrophies  of  industry 
are  a  lamentable  phenomenon  in  our  industrial  life,  and  give  rise 
to  a  situation  which  it  has  been  shown  that  the  individual  is 
unable  to  meet.  Because  it  has  appeared  that  the  individual 
was  practically  powerless  to  protect  himself  from  such  hazards, 
and  to  provide  against  their  effects  to  himself  and  his  dependents, 
the  state,  in  its  sovereign  capacity  and  in  the  exercise  of  the 
police  power,  has  been  obliged  to  intervene. 


14 

At  this  point,  and  at  the  risk  of  reciting  principles  which 
are  famiHar  to  all,  I  think  it  necessary  to  review  briefly  the 
common  law  rules  as  to  employer's  liability,  because  of  the 
influence  of  this  legal  doctrine  on  accident  insurance,  and  par- 
ticularly the  larger  problems  of  accident  underwriting  in  its 
social  aspect. 

At  common  law  the  victim  of  an  industrial  accident  must 
bear  the  loss  himself,  unless  it  happened  under  such  circumstances 
as  to  impose  legal  liability  on  his  employer.  The  law  recognized 
a  certain  indefinite  standard  to  which  the  employer  must  conform 
and  when  compliance  with  that  standard  could  be  shown  the 
employer  was  exempt  from  liability.  This  standard,  that  of  the 
"ordinarily  prudent  man,"  when  applied  to  the  relation  of  em- 
ployer and  employee  expressed  itself  in  certain  general  regulations 
which  may  be  briefly  stated  as  follows : — 

I.  The  employer  must  furnish  the  employee  with 
a  safe  and  suitable  place  in  which  to  work. 

II.  He  must  furnish  him  with  safe  and  suitable 
tools  and  appliances  with  which  to  do  the  work. 

III.  He  must  surround  him  with  safe  and  com- 
petent fellow-employees. 

IV.  He  must  see  that  the  employee  is  properly 
instructed   as  to  the  hazards  involved  in   the  work. 

The  foregoing  were,  in  general,  the  common  law  obligations 
of  an  employer  to  his  employee.  In  event  of  an  industrial 
accident  the  employee  had  no  redress  against  his  employer 
unless  a  breach  of  some  one  of  those  obligations  could  be  es- 
tablished, and  the  only  finality  in  the  attempt  to  impose  lia- 
bility on  the  employer  was  the  judgment  of  a  court  of  last  re- 
sort at  the  termination  of  litigation.  In  defense  of  an  action 
three  particular  defenses  were  recognized,  any  one  of  which, 
if  established,  would  defeat  recovery  on  the  part  of  the  employee. 
These  were: — 

I.  That  the  accident  was  caused  by  a  danger  in- 
herent in  the  business,  and  incident  to  it,  the  defense 
of  assumption  of  risk. 

II.  That  the  accident  was  caused  by  a  co- 
employee,  the  fellow-servant  rule. 

III.  That  the  accident  was  caused  wholly  or 
partially  by  the  carelessness  of  the  injured  himself, 
the  defense  of  contributory  negligence. 

The  legal  principles  of  the  liability  of  the  employer  to  his 
employee  can  be  expressed  in  a  very  few  words,  but  the  applica- 
tion of  these  principles  has  resulted  in  a  tremendous  volume  of 
litigation,  thousands  of  reported  cases,  and  a  condition  of  chaos 
as  to  the  rights  of  both  employer  and  employee.    Statutes  have 


15 

been  passed  to  remedy  this  condition,  but  the  doubts  which 
have  arisen  regarding  their  construction  have  frequently 
increased  rather  than  diminished  the  uncertainty.  In  addition 
to  the  difficulties  involved  in  the  application  of  the  law,  we  have 
had  the  unsatisfactory  rules  as  to  the  assessment  of  damages 
in  personal  injury  cases.  The  underlying  principle  of  the  rule 
of  damages  is  that,  when  liability  is  shown,  the  award  shall  be 
compensatory,  but  with  no  fixed  standards  to  follow  a  most 
unsatisfactory  condition  has  arisen  in  this  particular. 

The  statutory  changes  in  the  common  law,  purporting 
to  increase  the  liability  of  the  employer,  and  the  increasing 
disposition  on  the  part  of  employees  to  hold  their  employers 
for  damages  for  occupational  injuries,  gave  rise  to  the  under- 
writing of  liability  insurance,  which  is  a  form  of  accident  in- 
surance. It  is  the  object  of  liability  insurance  when  written 
in  the  employer's  liability  form  to  cover  the  legal  liability  of 
employers  for  injuries  to  their  employees.  Employer's  lia- 
bility is  being  so  rapidly  superceded  by  workmen's  compen- 
sation that  it  seems  that  the  employer's  liability  policy  will 
soon  be  an  underwriting  relic,  and  the  study  of  employer's 
liability  insurance  merely  a  matter  of  historical  interest  in  the 
education  of  any  thoroughly  trained  casualty  insurance  man. 

This  brief  survey  of  the  common  law  doctrines  of  em- 
ployer's liability  is  a  necessary  introduction  to  the  subject  of 
workmen's  compensation,  which  is  essentially  a  problem  of 
accident  insurance  and  accident  prevention.  Without  con- 
sidering in  detail  any  of  the  steps  in  the  transition  from  the 
system  of  employer's  liability  to  that  of  workmen's  compen- 
sation, it  may  be  stated  that  the  injustice  of  the  former  system 
in  our  modem  industrial  life  became  so  apparent  that  the 
system  as  a  whole  fell  before  the  theory  that  industry  should 
as  a  matter  of  social  justice  bear  at  least  a  part  of  the  financial 
losses  caused  by  industrial  accidents,  and  thus  workmen's 
compensation  became  an  accomplished  fact. 

The  common  law  system  of  employer's  liability  is  founded 
on  the  idea  of  fault  on  the  part  of  the  employer;  the  workmen's 
compensation  system  is,  on  the  other  hand,  based  on  the  prin- 
ciple that  a  workman  should  receive  compensation  for  injuries 
sustained  during  the  course  of  and  arising  out  of  his  employ- 
ment, regardless  of  fault  on  the  part  of  his  employer,  and  of 
his  own  fault  unless  the  injury  is  caused  by  his  intentional 
carelessness.  The  common  law  doctrines  of  employer's  liabil- 
ity were  from  time  to  time  changed  by  statute,  but  the  effect 
of  this  legislation  was  only  to  increase  the  liability  of  the  em- 
ployer and  not  to  make  him  liable  regardless  of  the  element  of 
fault  on  his  part,  or  to  make  certain  the  payment  of  damages 
to  the  injured.  Workmen's  compensation  legislation  was 
revolutionary  in  both  of  these  particulars. 


16 

I  have  stated  that  the  subject  of  workmen's  compen- 
sation is  essentially  a  problem  of  accident  insurance.  One  of 
the  elements  of  any  well  considered  compensation  law  is  the 
matter  of  security  of  payment  of  the  obligations  it  imposes. 
A  failure  to  secure  the  payments  might  make  its  obligations 
nugatory.  Under  the  common  law  system  of  employer's 
liability  the  payment  of  a  judgment  depended  on  the  finan- 
cial ability  of  the  defendant  to  pay  it,  and  if  he  was  unable  to 
pay  the  judgment  was  worthless.  The  employer's  liability 
contract,  in  theory,  afforded  no  security  of  payment  to  the 
injured,  for  it  was  an  agreement  between  the  employer  and  the 
insurer  to  indemnify  the  employer,  and  the  employee  was  not 
a  party  to  it,  hence  he  was  not  protected  by  it. 

The  manner  of  security  of  payment  of  compensation  has 
been  the  battleground  of  the  compensation  agitation  in  this 
country.  There  has  been  general  agreement  on  the  proposi- 
tion that  such  payments  should  be  secured,  but  the  question 
as  to  whether  the  insurance  should  be  by  stock  companies, 
by  mutual  organizations,  or  by  state  administered  funds  has 
been  a  subject  of  contention.  While  several  states  have  com- 
mitted themselves  to  a  state  insurance  system  to  the  exclusion 
of  all  other  systems,  the  general  result  has  been  that  the  choice 
of  institutions  has  been  left  to  the  employer,  and  that  where 
state  funds  were  provided  the  employer  might,  if  he  so  chose, 
insure  his  obligations  in  private  organizations.  The  spirit 
of  all  compensation  insurance  is  against  any  limitation  of  lia- 
bility on  the  part  of  the  insurer,  who  must,  when  he  assumes 
the  compensation  obligation,  assume  it  all.  This  is  in  con- 
trast to  the  practice  in  liability  underwriting  of  placing  a  limit 
on  the  risk  assumed  by  the  liability  company. 

It  is  the  spirit  of  compensation  that  all  expense  of  the 
system  shall  be  borne  by  the  employer,  and  hence  be  made  a 
part  of  the  cost  of  production,  and  that  the  employee  shall 
not  be  made  to  bear  any  part  of  it.  In  some  acts  any  attempt 
on  the  part  of  the  employer  to  place  the  cost  of  compensation, 
or  any  part  of  it,  on  the  employee  is  specifically  penalized. 
The  assumption  of  the  compensation  obligations  by  the  em- 
ployer is  in  theory  elective  in  the  larger  number  of  the  states 
that  have  passed  compensation  laws,  but  in  practice  the  laws 
are  compulsory.  The  employer  electing  to  pay  compensation 
must,  in  most  states,  secure  the  payment  of  the  obligations 
in  one  of  the  ways  provided  by  the  law,  so  the  result  of  the 
system  is  that  some  form  of  compensation  insurance  is  com- 
pulsory. 

While  compensation  for  industrial  accidents  is  the  apparent 
purpose  of  the  compensation  system,  the  fact  is  recognized 
that  it  has  a  higher  social  service  to  perform  in  the  conserva- 
tion of  human  lives  and  human  resources  rather  than  in  finan- 
cial compensation  for  their  destruction.     An  essential  element 


17 

in  connection  with  any  insurance  system  of  compensation 
obligations  is  that  of  accident  prevention,  the  object  of  which 
is  to  reduce  the  possibihty  of  accidents  to  a  minimum.  This 
idea  is  not  an  invention  of  the  compensation  system,  for  many 
of  the  statutes  which  were  passed  in  connection  with  employer's 
liability  legislation  before  any  compensation  laws  were  enacted 
required  employers  to  adopt  certain  precautions  to  prevent* 
injuries,  and  the  liability  insurance  companies  made  the 
inspection  of  risks  and  the  recommendation  of  safeguards  an 
essential  element  of  liability  protection.  Mention  should 
also  be  made  of  the  efforts  of  enlightened  and  humane  employ- 
ers, independent  of  any  legal  compulsion,  to  devise  and  adopt 
all  possible  precautions  to  prevent  accidents  to  their  employees. 
Under  compensation,  however,  this  element  of  accident  pre- 
vention is  specially  emphasized  and  is  made  an  important 
part  of  the  system. 

Workmen's  compensation  laws  provide  only  for  accidents 
which  happen  during  the  course  of  and  arise  out  of  the  employ- 
ment of  the  injured.  Workingmen  in  common  with  all  other 
persons  are  exposed  to  the  non-occupational  hazards  of  life, 
and  there  is  no  coverage  under  compensation  policies  for  any 
such  accidents.  It  will  be  seen,  therefore,  that  the  workmen's 
compensation  system  does  not  furnish  full  accident  protection. 
The  old  workmen's  collective  policies  were  at  one  time  written 
to  cover  either  for  accidents  of  occupation  only,  or  to  cover 
for  the  full  twenty-four  hours,  so  the  latter  furnished  protection 
for  both   occupational   and   non-occupational   accidents. 

It  is  possible,  of  course,  for  the  workman  to  provide  him- 
self with  accident  insurance  on  his  own  account  which  will 
supplement  the  compensation  pa3nnents  for  occupational 
injuries  and  also  furnish  him  protection  for  non-occupational 
injuries.  It  will  be  seen,  however,  that  the  compensation 
system  opens  up  a  new  field  for  the  activities  of  accident  com- 
panies in  offering  protection  for  accidents  caused  by  non- 
occupational hazards  only.  We  have,  therefore,  the  signifi- 
cant announcement  that  one  of  the  large  life  insurance  com- 
panies, a  leader  in  the  industrial  field  and  one  of  the  leaders 
in  the  efforts  of  the  life  companies  to  prolong  and  conserve 
human  life,  is  about  to  enter  this  field  and  write  this  line  of 
insurance  on  the  group  plan,  entering  into  contracts  with  em- 
ployers to  insure  their  employees  against  sickness  and  against 
accidental  injuries  not  arising  out  of  and  in  the  course  of  em- 
ployment. Inasmuch  as  this  is  a  matter  of  contractual  as 
distinguished  from  statutory  regulation  the  premiums  may 
be  paid  by  the  employers,  the  employees,  or  by  joint  contri- 
butions from  both  employers  and  employees.  This  seems  to 
be  only  a  logical  underwriting  development. 

The  subject  of  health  insurance  is  closely  related  to 
that  of  accident  insurance,  so  close  in  fact  that  the  com- 
panies  which    write   accident   insurance   usually   write    health 


18 

insurance,  and  it  is  written  in  the  same  policy  in  connection 
with  accident  insurance.  The  Massachusetts  records  to  which 
I  have  referred  show  that  the  consideration  of  health  insurance 
in  this  country  antedates  that  of  accident  insurance,  but  the 
matter  of  the  actual  inception  of  health  underwriting  in  the 
United  States  was  some  thirty  years  after  the  inception  of  the 
accident  contract,  so  that  health  insurance  is  an  underwriting 
development  of  the  last  twenty  years. 

It  is  the  function  of  health  insurance  to  furnish  indemnity 
in  case  of  interruption  of  earning  power  by  reason  of  disease, 
and  in  this  function  it  is  analogous  to  the  accident  contract  in 
furnishing  similar  indemnity  for  accidental  injuries.  The  basis 
of  the  insurable  interest  necessary  to  support  the  contract  is 
the  same,  for  it  may  be  assumed  that  an  assured  has  the  same 
right  to  protect  his  earning  power  from  the  effects  of  disease 
that  he  has  to  protect  it  from  the  effect  of  accidents. 

The  problem  of  disease  is  inevitable,  and  is  as  old  as  the 
human  race  itself,  but  it  is  only  within  recent  years  that  efforts 
have  been  made  to  prevent  this  misfortune  and  to  distribute  the 
losses  which  it  causes.  While  the  element  of  prevention  is  not 
overlooked  as  an  underwriting  factor,  that  of  compensation  for 
the  interruption  of  earning  power  is  at  present  the  principal 
factor  in  health  underwriting.  The  fact  of  our  familiarity  with 
bodily  diseases,  and  that  such  misfortunes  were  considered  an 
unpreventable  incident  of  life,  doubtless  retarded  the  inception 
and  development  of  any  systematic  effort  to  distribute  the  losses 
which  they  occasion. 

While  according  to  the  policy  contract  it  appears  that  the 
insurance  undertaking  is  primarily  one  of  compensation  for 
losses  that  may  be  sustained,  it  has  been  seen  that  modem 
underwriting  recognizes  a  more  important  and  a  more  humane 
function,  that  of  the  prevention  of  misfortunes  rather  than 
compensation  for  the  losses  attendant  upon  them.  It  may  be 
said  that  the  spirit  of  modem  underwriting  is  prevention,  not 
compensation.  Prevention  first;  compensation  after  all  efforts 
at  prevention  have  failed . 


Tne  History  and  DGveloJ)ment 
of  Acciaent  Insurance 

BY 
WALTER    C.    FAXON.    Vice-Presic3ent 
JEtna  Life  Insurance  Company. 


JANUARY  22.  1915 


The  history  of  Accident  Insurance  in  this  Country  has 
been  written  many  times  and  you  are  all,  no  doubt,  reason- 
ably familiar  with  it.  Commencing  with  the  organization  in 
1863  of  the  Travelers  Insurance  Company,  as  the  sole  exponent 
of  that  form  of  Insurance,  its  early  days  were  the  ones  in  which 
the  problems  of  an  entirely  new  line  of  business  were  solved 
by  the  little  group  of  pioneers,  James  G."  Batterson,  Rodney 
Dennis  and  John  E.  Morris,  President,  Secretary  and  Office 
Boy,  respectively  of  the  Travelers  Insurance  Company.  Its 
first  office  was  located  in  a  single  room  on  the  second  floor  of 
the  building  now  standing  in  Hartford  on  Main  Street,  at  the 
Corner  of  Kingsley,  in  which  building  the  United  States  Bank 
has  its  banking  rooms. 

Prior  even  to  this  time  we  are  advised,  from  the  researches 
made  by  your  Vice  President,  Mr.  H.  P.  Dunham,  in  his  "His- 
tory of  Insurance,"  that  the  Hon.  Sherman  Leland,  Judge  of 
Probate*  and  General  H.  A.  S.  Dearborn,  Mayor,  both  of  Rox- 
bury,  Mass.,  appear  to  have  been  the  originators  of  Accident 
Insurance  in  this  Country.  In  February,  1850,  approximately 
65  years  ago,  they  organized  the  Franklin  Health  Assurance 
Co.  of  Massachusetts,  with  a  capital  stock  of  $50,000.  Its 
Charter  empowered  the  Company  to  issue  Accident  Policies, 
but  while  the  word  "Policy"  was  used  in  the  documents  issued 
by  the  Company,  they  were,  like  those  previously  and  con- 
currently issued  by  Accident  Companies  in  England,  really 
Accident  Tickets,  or  Ticket  Policies  as  the  small  premium 
charged,  the  limited  term  covered  and  the  restricted  coverage 
granted  all  indicate. 

Let  me  give  you  the  language  used  in  one  of  these  unique 
Ticket  policy  contracts.  Perhaps  it  may  suggest  something 
we  have   overlooked.     It   reads   as   follows: 

"President, 
Hon.    Sherman    Leland,    Judge    of    Probate. 


20 

Vice  President, 
Gen.  H.  A.  S.  Dearborn,  Mayor  of  City  of  Roxbury. 

FRANKLIN  HEALTH  ASSSURANCE  COMPANY 
OF  MASSACHUSETTS. 
Capital   $50,000.00 
Especially  empowered  to  insure  against  accidents. 

This  policy  of  insurance  witnesseth  that,  in  consideration 
of  15  cents,  paid  therefor,  the  Franklin  Health  Assurance  Com- 
pajiy  do  assure  the  party,  whose  name  with  the  time  of  purchase 
and  delivery  is  endorsed  hereon,  for  the  term  of  24  hours,  from 
and  after  the  date  as  endorsed,  and  promise  to  pay  to  the  said 
party,  the  sum  of  two  hundred  dollars,  provided  the  said  party 
shall,  during  the  continuance  of  this  policy,  receive  any  bodily 
injury  in  consequence  of  an  accident  by  a  railroad  or  steam- 
boat, and  thereby  be  detained  for  the  term  of  ten  days;  or  if 
by  such  accident,  caused  by  a  railroad  or  steamboat,  the  said 
party  shall  be  totally  disabled  from  attending  to  any  business 
for  the  term  of  two  months  next  succeeding  such  accident  and 
injury,  this  Company  hereby  agree  and  promise  to  pay,  in  lieu 
of  the  above  named  sum,  the  sum  of  four  hundred  dollars, 
payment  to  be  made  within  thirty  days  after  notice  and  proof 
are  given  to  the  Company. 

(Signed)     Stephen  Bates,  Secretary. 
Boston,   July   1st,   1850." 

This  particular  policy  was  issued  at  4  o'clock  p.  m.  October 
25th,  1850.  It  insured  travelers  only  and  not  persons  employ- 
ed on  railroads  or  steamboats. 

The  activities  of  the  Companies  that  during  the  early 
years  were  organized  for  Accident  business  were  devoted  largely 
to  the  sale  of  Accident  Tickets  covering  railway  travel,  and 
these  companies  became  so  numerous  that  the  business  was 
split  up  so  fine  there  was  not  enough  of  it  to  go  around.  So 
they  were  all  amalgamated,  so  far  as  their  ticket  business  was 
concerned,  into  one  Company,  The  Railway  Passengers  Assur- 
ance Corporation,  the  Capital  Stock  of  which  was  owned  by 
the  several  Companies  that  had  turned  over  their  Ticket  busi- 
ness to  the  new  Company.  This  stock  gradually  drifted  into 
the  possession  of  the  Travelers  and  in  due  time  a  Ticket  De- 
partment was  organized  and  the  Railway  Passengers  Assurance 
Company  went  out  of  existence. 

Meanwhile  the  development  of  the  business  designed  to 
afford  financial  indemnification  for  the  losses  being  constantly 
suffered    because    of    bodily    injuries    sustained    by    accidents, 


21 

many  of  which  resulted  fatally,  or  in  material  losses  such  as 
the  loss  of  limbs  or  sight,  as  well  as  the  loss  of  time,  progressed 
substantially  and  steadily. 

Accident  Insurance,  as  now  conducted,  may  readily  be 
considered  in  three  principal  groups:  viz.. 

Stock  Personal  Accident  Insurance,  as  sold  by  Corpora- 
tions at  fixed  prices,  the  profits,  if  any,  belonging  to  the  Stock- 
holders. 

Industrial  Insurance,  also  sold  by  Stock  Companies,  and 
differing  only  from  the  Commercial  Personal  Accident  business 
in  methods  adopted  for  the  payment  of  premiums,  and  the 
writing  of  relatively  small  amounts  of  insurance  on  individual 
risks.  As  their  name  indicates,  these  Companies  operate  main- 
ly among  men  engaged  in  the  so-called  industrial  occupations, 
but  they  are  also  extending  their  operations  into  the  field  of 
Commercial  Accident  Insurance. 

Fraternal  Associations,  composed  of  groups  of  men  allied 
to  each  other  by  some  common  interest,  such  as  membership 
in  a  fraternal  organization,  or  a  common  occupation  like  Com- 
mercial Travelers,  or  in  local  societies  of  men  engaged  in  the  several 
trades  or  mercantile  employments. 

As  conducted  by  Stock  Companies,  the  business  of  Accident 
Insurance  has  increased  in  volume  amazingly  during  the  past 
few  years,  or  since  the  dawn  of  the  twentieth  century.  Prior 
to  that  time  the  contracts  of  insurance  contained  many  re- 
strictions and  by  some  companies  these  restrictions  were  used 
in  a  way  that  tended  to  make  the  business  unpopular.  At 
about  that  time  the  Companies  voluntarily  abolished  many 
restrictions  and  added  many  new  features  to  their  contracts, 
resulting  in  the  tremendous  growth  in  volume  of  business  trans- 
acted, already  referred  to,  and  to  an  increased  popularity  of 
this  kind  of  insurance,  so  that  now  a  very  much  larger  per 
centage  of  the  insurable  male  risks  are  carrying  Accident  In- 
surance than  before  that  time. 

I  understand  that  the  policy  contracts  are  to  be  analyzed 
by  someone  else  during  this  course  of  lectures,  so  I  will  refrain 
from  going  into  details  along  that  line,  however  interesting  it 
might  be  to  do  so  in  sketching  the  development  of  the  business. 

The  Industrial  methods  of  selling  accident  insurance  have 
likewise  produced  a  very  large  volume  of  business,  but  it  can 
hardly  be  truthfully  said  that  the  methods  of  claim  settlements 
adopted  by  many  of  the  Industrial  Companies  have  helped 
to  make  the  business  of  Accident  Insurance  popular.  These 
Companies  have  undertaken  the  task  of  finding  more  than 
one  hundred  cents  in  a  dollar.  Their  plan  has  been  to  collect 
$1.00  per  month  from  each  one  of  their  policyholders,  and  pro- 
vide variable  amounts  of  insurance  for  this  fixed  premium, 
according  to  the  classification  of  the  occupation  in  which  the 
Insured  was  engaged.     These  policies  were,  as  a  rule,  adver- 


22 

tised  to  cover  "every  accident  and  every  illness"  but  upon 
careful  scrutiny  were  found  to  contain  clauses  materially  re- 
stricting the  amounts  payable  under  specified  conditions,  and, 
if  government  reports  are  to  be  relied  upon,  the  adjustment 
of  claims  was  in  many  cases  made  without  due  regard  to  the 
equities  of  the  cases  but  with  frequent  use  of  defenses  based  on 
alleged  technical  violations  of  the  contracts,  and  much  dis- 
satisfaction resulted. 

If  the  monthly  payments  were  not  made  on  or  before 
their  due  date  they  would  be  accepted  but  a  penalty  for  delay, 
viz.  the  suspension  of  the  Health  insurance  for  thirty  days 
would  be  imposed,  so  that  a  man  might  continuously  pay  his 
monthly  premiums  and  at  the  same  time  be  continuously 
"suspended"  by  reason  of  delays  in  making  such  pa3nnents. 
It  might  also  be  the  fault  of  the  collector  rather  than  his  own 
that  the  delay  occurred. 

Let  us  hope  that  these  conditions  have  improved  very 
considerably  of  late  and  that  the  Industrial  business  is  being 
much  more  satisfactorily,  and  so,  of  course,  more  success- 
fully conducted. 

The  Commercial  Travelers  Associations  and  other  frater- 
nal organizations  have  acquired  a  very  large  membership  and 
are  generally  satisfactorily  conducted,  the  field  being  amply 
sufficient  to  provide  for  all  kinds  just  the  same  as  we  have 
electric  Hghts  and  candles  and  all  the  other  intermediate  means 
of  illuminating  the  darkness  when  the  sun  sets. 

Through  the  favoring  legislation,  of  which  they  are  in- 
variably the  recipients,  and  the  lack  of  expenditures  for  agents' 
commissions,  taxes,  licenses,  rents,  traveling  expenses  and  all 
that  sort  of  thing,  these  associations  are  enabled  to  provide 
for  the  payment  of  their  claims  by  the  collection  of  a  consider- 
ably less  amount  of  money  from  each  member  than  the  Stock 
Companies  have  to  collect  from  their  policy  holders  for  the 
degree  of  protection  afforded  by  the  respective   organizations. 

Under  the  rules  governing  the  membership  in  fraternal 
organizations  the  payment  of  a  calamity  loss  would  have  to  be  met 
by  extra  assessments,  and  to  what  extent  the  members  would 
stand  for  heavy  extra  assessments,  when  their  main  object  in 
belonging  to  the  associations  is  to  get  their  protection  at  the 
lowest  possible  cost,  is  a  question  which  you  can  answer  fully 
as  well  as  I  can.  Some  people,  you  know,  think  it  is  cheaper 
to  move  at  frequent  intervals  than  to  pay  rent. 

The  manifest  advantage  of  insurance  in  a  large  Stock 
Company  as  compared  with  the  degree  of  protection  afforded 
by  the  fraternal  organization  is  the  absolute  security  of  the 
insurance  provided  by  the  Stock  Company  in  cases  where 
great  disasters  involve  many  lives  and  call  for  the  payment 
of  vast  sums  of  insurance  money.     Take  such  a  disaster  as  the 


23 

wreck  of  the  Titanic,  not  only  were  there  many  large  policies 
carried  by  the  persons  whose  lives  were  lost,  but  in  nearly  all 
of  them  the  amounts  payable  were  doubled  by  the  character 
of  the  accident.  The  payments  amounted  to  over  $700,000.00. 
Take  the  recent  accident  in  the  New  York  subway,  while 
fortunately  only  one  life  'was  lost,  some  200  were  injured  and 
the  possibilities  of  the  accident  in  losses  to  the  Insurance  Com- 
panies were  immeasurable. 

ASSESSMENT  PLAN. 

Accident  Insurance  as  well  as  Life  Insurance  was  for  many 
years  conducted  upon  the  assessment  plan,  the  most  notable 
organization  of  this  kind  being  the  United  States  Mutual 
Accident  Association,  of  New  York,  which  finally  failed  in  1894. 
This  Association  was  organized  by  Mr.  Jas.  R.  Pitcher  while  he 
was  employed  as  a  clerk  in  a  department  store,  I  think,  and 
was  built  up  by  his  persistent  energy  and  resourcefullness  to  a 
point  where  it  had  a  very  large  membership.  The  Policies  of 
this  Association  were  the  first  to  contain  the  provision  for 
paying  double  benefits  for  railroad  accidents  and  they  were 
attractive  in  many  ways.  Mr.  Pitcher  arranged  to  have  his 
compensation  based  upon  the  payment  to  him  of  one  dollar  a 
year  for  each  member  of  the  Association  and  it  was  his  effort 
to  have  this  salary  contract  capitalized  and  thereby  made 
permanent,  I  understand  that  created  the  dissatisfaction  which 
brought  about  the  failure  of  the  Association. 

Two  organizations  now  in  existence  grew  out  of  this  one» 
the  Preferred  Accident  Company  and  the  United  States  Casualty 
Company. 

The  Preferred  was  an  assessment  company  at  first,  com- 
posed of  men  who  had  withdrawn  from  the  United  States 
Mutual  Accident  Association  under  the  leadership  of  Mr. 
Kimball  C.  At  wood,  and  after  a  few  years  it  was  reorganized 
as  a  Stock  Company  and  has  conducted  its  business  along  the 
lines  of  insuring  risks  classed  "Preferred"  in  the  prevailing 
classification   of  risks. 

The  United  States  Casualty  Company  was  the  immediate 
successor  of  the  defunct  United  States  Mutual  Accident  As- 
sociation and  started  with  the  business  upon  the  books  at  the 
time  of  its  failure.  Many  of  the  General  Agents  of  the  As- 
sociation were  not  content  to  cast  in  their  lot  with  that  organ- 
ization and  sought  connections  elsewhere,  some  with  the  Travel- 
ers and  some  with  the  ^tna  Life,  and  they  naturally  brought 
their  business  with  them,  much  of  which  is  even  now  upon  the 
books  of  these  Companies,  and  many  of  the  Agents  and  others  asso- 
ciated with  that  organization  are  sti]l  with  these  two  Companies. 


24 

HEALTH  INSURANCE. 

That  indemnification  for  loss  of  time  resulting  from  sick- 
ness could  also  be  made  a  successful  business  proposition  and 
be  put  upon  a  sound  financial  basis,  was  regarded  as  impractic- 
able as  was  the  successful  conduct  of  Accident  insurance  in  the 
early  years  of  its  experimentation.  This  sort  of  thing  had 
been  tried  and  had  failed,  as  had  the  insurance  of  horses,  mules 
and  slaves.  Such  losses  had  been,  to  a  degree,  taken  care  of 
through  local  fraternal  associations,  which  could  be  conducted 
without  expense  and  without  the  legal  and  financial  obligations 
imposed  upon  the  insurance  institutions  that  might  have  the 
temerity  to  assume  the  risks  as  a  business  proposition. 

However,  taking  it  up  in  a  tentative  way,  and  in  a  way 
that  seemed  ridiculous  as  well,  the  Accident  Companies,  one 
after  another,  began  writing  Health  Insurance.  The  coverage 
granted  was  extremely  limited,  the  premiums  were  low,  the 
commissions  restricted,  medical  examinations  required  and 
generally  speaking  the  Companies  handled  Health  Insurance 
with  apparent  fear  and  tremiling  from  within  the  office  walls, 
and  with  more  or  less  ridicule  and  amazement  coupled  with 
prophecies  of  dire  disaster  from  the  public. 

Much  to  their  amazement,  however,  it  was  discovered 
that  not  everybody  who  had  a  policy  of  Health  Insurance 
had  also  a  spell  of  sickness  every  year,  and  gradually  the  scope 
of  the  coverage  was  broadened,  commissions  and  expenses 
increased,  medical  examinations  were  abandoned  and  the  busi- 
ness firmly  established  as  an  essential  complement  to  that  of 
Accident  Insurance. 

It  may  not  be  out  of  order  to  indicate  that  the  same  lack 
of  conservatism  that  has  of  late  prevailed  in  the  Accident  In- 
surance business,  has  also  manifested  itself  in  the  Health  In- 
surance business  and  danger  signals  from  Maine  to  California 
should  be  displayed  if  the  Companies  engaged  in  this  line  of 
insurance  are  not  to  be  wTecked  opon  the  rocks  of  disaster  by 
the  adoption  and  maintenance  of  features  in  their  policy  con- 
tracts that  are  bound  to  involve  obligations  for  the  payment 
of  much  greater  amounts  in  losses  than  reasonable  and  obtain- 
able premium  rates  can  produce  at  existing  cost  of  production. 

MULTIPLE  LINE  COMPANIES. 

The  tendency  of  Stock  Companies  has  been  to  affiliate 
other  Casualty  lines  with  the  transaction  of  Accident  and 
Health  business,  and  also  in  some  instances  to  add  Life  In- 
surance to  the  Accident  lines  or  Life  Insurance  Companies 
have  added  Accident  and  Health  Insurance  to  their  Life  lines. 
Of  late,  the  Fire  Insurance  Companies  have  established  Accident 
and  Health  Departments  and  Liability  and  Compensation  In- 


25 

surance  has  also  been  taken  up  by  Companies  that  had  re- 
sisted temptation  in  that  direction  a  long  time. 

Under  the  laws  of  the  leading  States,  Companies  trans- 
acting Life  Insurance  could  not  transact  other  than  Accident, 
Health  and  Liability  insurance,  which  left  the  field  of  mis- 
cellaneous casualty  lines  such  as  Plate  Glass,  Steam  Boiler, 
Fly  Wheel,  Sprinkler  Leakage,  Burglary,  Automobile  Property 
Damage,  Automobile  Collision,  also  Fidelity  and  Surety  Bond- 
ing open  to  companies  organized  mainly  for  Accident  business 
to  exploit  and  so  become  multiple  line  companies.  This  gave 
them  a  certain  advantage  in  the  placing  of  their  agencies  espec- 
ially in-  localities  where  the  most  desirable  Agents  were  men 
desirous  of  having  all  or  most  of  these  lines  to  handle  in  con- 
junction with  their  Fire  Insurance  business.  Of  course,  the 
Life  Insurance  Companies  that  also  wrote  Accident,  Health  and 
Liability  Insurance  had  advantages  in  the  selection  of  Agents 
in  some  instances  but  not  to  the  extent  that  the  ability  to  write 
all  casualty  lines  favored  the  Companies  other  than  Life. 

To  m.eet  this  situation,  the  Life  Companies  have  organ- 
ized casualty  companies  as  subsidiary  companies  and  the  Fire 
Insurance  companies  have  done  the  same  thing  until  now  there 
are  many  instances  in  which  the  desired  protection  as  against  all 
the  contingencies  that  confront  the  automoble  owner,  for  in- 
stance, can  be  procured  not  only  through  one  agency  in  his 
home  town,  but  practically  from  one  Company. 

The  Fidelity  and  Casualty  Company  of  New  York  was 
one  of  the  first  and  has  come  to  be  one  of  the  largest  of  the 
Com.panies  writing  multiple  lines  —  other  than  Life  and  Fire 
—  of  the  Companies  in  this  class. 

In  marked  contrast  there  is  the  Continental  Casualty 
Company  of  Chicago  —  which  as  a  single  line  company,  con- 
sidering Accident  and  Health  as  one  line,  —  has  built  up  a 
very  large  premium  income  without  the  assistance  of  mis- 
cellaneous casualty  lines.  It  is,  however,  yielding  to  the  pre- 
vailing temptation. 

This  Company  has  operated  very  extensively  in  the  Indus- 
trial line  and  has  also  a  very  large  business  in  the  insuring  of 
railroad  employees  upon  the  pay  order  plan,  with  some  com- 
mercial business. 

There  is  still  anothei  company  located  in  the  extreme  west, 
the  Pacific  Mutual  Life  Ins.  Co.,  which  has  established  a  sizable 
Accident  and  Health  Department,  in  the  Commercial  lines,  also 
a  considerable  volume  of  railroad  pay  order  business.  Hartford 
is  entitled  to  more  or  less  credit  on  account  of  this  Company 
inasmuch  as  its  Vice  President,  Mr.  Danford  N.  Baker,  in 
charge  of  the  Accident  and  Health  business,  received  his  early 
training  in  the  office  of  the  Travelers  Ins.  Co.,  where  as  his 
associate,  I  had  strongly  impressed  upon  my  memory  his  tireless 
energy  and  activity.     Not  content  with  doing  his   office  work 


26 

simply,  he  was  constantly  on  the  alert  to  secure  accident  appli- 
cations, having  the  qualifications  of  a  salesman  to  a  marked 
degree,  constantly  urging  him  on.    He  is  just  the  same  now. 

INTERNATIONAL  ASSOCIATION  OF  ACCIDENT 
UNDERWRITERS. 

A  brief  reference  to  the  part  that  has  been  taken  in  the 
growth,  development  and  to  some  degree,  control  of  the  ac- 
cident and  Health  business  by  the  International  Association 
of  Accident  Underwriters  is  not  out  of  place  in  this  review,  I 
think.  This  organization  was  first  •  established  by  the  Assess- 
ment and  Traveling  Men's  Associations  and  for  many  years 
membership  was  confined  to  such  organizations.  Its  prin- 
cipal work  was  the  m^aintenance  of  a  bureau  for  the  exchange 
of  information  among  its  mxem.bers  concerning  risks  found  to 
be  undesirable  physically,  etc.,  also  fraudulent  claimants, 
crooked  lawyers,  doctors  and  agents;  and  the  holding  of  an 
annual  convention  by  m.eans  of  which  the  delegates  established 
social  relations  with  each  other  and  learned  to  know  and  to 
love  each  other  better.  About  the  year  1900,  the  Association 
decided  to  increase  its  membership  and  invite  Stock  Companies 
to  join.  Within  a  few  years,  nearly  all  the  Stock  Companies 
of  the  United  States  and  Canada  joined  the  Association  and 
its  annual  conventions  were  held  alternately  in  the  States  and 
in  Canada.  Mr.  William  DeM.  Hooper,  a  most  earnest  and 
thorough  student  of  the  Accident  and  Health  business,  a  man 
that  it  was  always  a  pleasure  and  advantage  to  meet,  social, 
kindly,  courteous  and  wise,  conducted  the  Information  Bureau, 
already  referred  to,  for  a  long  while  and  then  the  Bureau  was 
turned  over  to  him  and  established  as  a  separate  business  enter- 
prise, being  now  known  as  the  Hooper-Holmes  Information 
Bureau.  It  is  now  conducted  by  Mr.  Bayard  P.  Holm.es,  its 
President,  and  has  extended  its  operations  concurrently  with 
the  growth  of  the  interests  intrusted  to  its  care.  This  Bureau 
always  reported  to  the  International  Association  and  does  now 
to  its  successor. 

At  the  Conventions  of  this  International  Association  the 
various  and  sundry  questions  connected  with  the  evolution  of 
Accident  and  Health  insurance  were  profoundly  discussed, 
and  radicalism  and  conservatism  contended  annually  for  su- 
premacy without  much  avail.  The  scope  and  meaning  of  the 
"Double-  Benefit"  clauses  of  the  policy,  the  payment  of 
indemnity  for  partial  disability  and  for  how  long ;  the  insurance 
of  beneficiaries  either  with  or  without  extra  premium,  the 
insuring  of  children  free  of  charge;  the  Missouri  suicide  law; 
the  payment  of  claims  for  death  or  disability  due  to  sunstroke, 
asphyxiation,  gas  or  septic   infection;  the  automobile   hazard; 


27 

the  granting  of  accumulations,  the  transferring  of  accrued 
accumulations,  the  twisting  of  Agents,  the  co-operation  of 
Claim  Departments,  the  loss  ratio,  the  expense  ratio,  taxation. 
State  or  Federal  supervision,  all  these  and  many  more  topics 
claimed  their  attention,  while  golf,  baseball,  bridge,  excursions, 
dancing,  music,  and  most  of  all,  the  banquets  and  the  ladies, 
established  friendly  relations  among  the  fifty  or  sixty  Companies 
that  could  never  have  been  accomplished  in  any  other  way. 
While  the  Association  is  not  credited  with  having  accomplished 
substantial  reforms,  where  would  the  mad  craze  for  business 
have  landed  the  Companies  except  for  the  restraining  influences 
and  the  degree  of  co-operation  that  really  was  accomplished 
through  this  instrumentality  ? 

About  three  years  ago,  the  International  Association  of 
Accident  Underwriters  was  consolidated  with  the  Board  of 
Casualty  and  Surety  Underwriters  and  the  two  became  the 
International  Association  of  Casualty  and  Surety  Underwriters. 

This  organization  comprises  membership  of  Companies 
in  all  the  Casualty  lines  and  has  Sections  devoted  to  the  special 
interests  of  the  several  lines,  the  m.ain  body  caring  for  inter- 
ests common  to  all,  such  as  legislation,  taxation,  etc.  By  the 
amalgam.ation,  the  Accident  business  was  left  without  any 
separate  complete  organization  to  look  after  its  special  inter- 
ests, the  sectional  plan  not  seeming  to  accomplish  that  result. 
Recently,  however,  there  has  been  organized  a  Bureau  of 
Personal  Accident  and  Health  Underwriters  which  is  expected 
to  supply  the  necessary  organization  to  promote  the  welfare 
of  the  Accident  and  Health  business. 

STATISTICS. 

I  have  refrained  thus  far  from  indulging  in  statistics,  but 
a  paper  of  this  sort  would  hardly  be  complete  without  a  few 
being  thrown  in  to  enliven  its  monotony. 

There  are  approximately  70  companies  transacting  personal 
accident  and  health  insurance  in  this  country,  91  in  Great 
Britain  and  33  in  Canada.  Of  the  first  70  Stock  Companies 
there  is  only  one  company  with  a  five  milHon  dollar  capital, 
one  with  four  million,  one  with  three,  one  with  two  and  nine 
with  capital  of  a  million  dollars  each.  The  other  companies, 
although  a  great  many  are  just  as  secure  as  are  the  million 
dollar  companies,  range  in  capital  from  $10,000.00  up.  Since 
the  commencement  of  the  business  in  this  country  fully  forty 
companies  have  failed  or  been  re-insured.  Besides  the  Stock 
Companies  there  are  65  mutual,  fraternal  and  Traveling  Men's 
organizations. 

The  net  gross  premiums  written  for  personal  Accident  and 
Health  business  in  1913  were  $41,451,216.00  as  against  $36,131,- 
879.00  in  1912  and  the  losses  paid  in  1913  were  $18,837,461.00 


28 

as  against  $16,534,712.00  in  1912,  with  an  average  loss  ratio 
in  each  year  of  approximately  47  per  cent.  The  number  of 
accidents  reported  to  the  Hooper-Holmes  Bureau  by  the  158 
subscribing  Casualty  Companies  and  Associations,  for  the 
year  ending  June  30th,  1914,  was  280,247  as  compared  with 
255,550  reported  in  the  previous  year. 

COMPETITION. 

Competition  has  entered  into  the  conduct  of  the  Accident 
and  Health  business  as  in  everything  else.  Possibly  everyone 
thinks  that  the  competition  in  his  line  of  business  is  greater 
than  that  of  any  other  line.  However  that  may  be,  while 
some  combinations  in  restraint  of  trade  were  discovered  by  the 
U.  S.  Government  officials,  no  actual  monoply  of  any  line  of 
business  has  been  discovered  and  governmental  supervision 
and  control  of  many  lines  of  business  has  very  nearly  suppressed 
the  individual  or  corporate  initiative  and  activities,  which 
had  resulted  in  the  great  developrnxcnt  of  the  vast  resources 
and  unlimited  possibilities  of  this  great  country  of  ours.  Com- 
petition has  its  advantages  and  its  evils.  In  Accident  Insurance 
the  difficulty  has  been  to  get  the  public  to  realize  the  value  of 
and  necessity  for  its  protection,  making  the  cost  of  procuring 
the  requisite  volume  of  business  through  the  personal  activities 
of  the  agents  alone  much  too  expensive.  The  Companies  have 
therefore  resorted  to  the  adoption  of  competitive  selling  features 
in  their  policies,  many  of  which  would  be  of  great  value  if  held 
down  to  reasonable  limits,  but  the  excessive  and  wholly  unscien- 
tific offers  for  loss  of  one  eye  or  one  hand  or  one  foot  have  simply 
placed  irresistible  temptation  in  the  path  of  those  of  get-rich- 
quick  ambition,  to  bring  about  the  condition  under  which  the 
payment  of  these  large  sums  would  be  called  for  and  the  inge- 
nuity displayed  to  make  the  conditions  appear  to  have  been 
''accidental"  are  very  extraordinary. 

Fraudulent  claims  are  perpetrated  against  all  companies 
but  mainly  against  large  companies,  and  notwithstanding  success- 
ful claim  adjustments  they  have  a  very  appreciable  effect  upon 
the  loss  and  loss  expense  ratios. 

With  this  competitive  situation  eliminated,  and  co-operation 
substituted,  the  possiblities  of  furnishing  adequate  Accident 
Insurance  protection  to  the  greatest  number  of  honest  insured 
at  minimum  cost  would  be  materially  increased. 

And  now  that  we  have  touched  a  few  of  the  high  places  in 
personal  accident  insurance  history,  the  question  may  be  asked 
by  some  of  you  young  gentlemen,  ''What  is  the  use  of  our  review- 
ing this  historical  vista  —  Of  what  material  good  will  it  be  to  us?" 
To  answer  that  question,  to  urge  you  to  delve  deeper  into  the 
general  history  of  the  subject  and  to  study  the  history  of  your 
own  particular  company  so  that  you  may  be  stronger  in  your 


29 

work,  and  more  loyal  to  your  company  than  ever  before,  I  will 
quote  one  of  the  world's  famous  historians.  He  was  generaliz- 
ing when  he  spoke,  but  the  truth  of  his  statement  applies  to 
whatever  history  you  study,  whether  it  is  the  history  of  the 
world,  the  history  of  your  race  or  the  history  of  your  business. 

"What  then,"  said  he,  "is  the  use  of  history?"  "It  teaches 
on  a  large  scale  what  the  experience  of  life  teaches  to  each  of 
ourselves  —  that  life  must  not  be  played  with,  that  there  are 
laws  which  we  must  learn  and  understand  as  universal  and  as 
inexorable  as  Physical  Laws." 

In  this  course  of  Institute  Lectures,  you  have  a  splendid 
opportunity  to  deepen  your  knowledge  of  the  personal  accident 
business  in  which  you  are  engaged,  and  make  yourselves  stronger 
and  better  fitted  to  cope  with  the  many  and  varied  problems 
which  each  successive  year,  and  oftentimes  each  successive 
week,  will  bring  to  your  attention,  demanding  solution,  and 
upon  the  correct  solving  of  which  rests  the  future  advancement 
of  the  business  and  the  welfare  of  the  millions  of  people  who 
now  rely  and  will  always  rely  upon  it  for  protection  when  calam- 
ity in  the  form  of  accident  or  illness  befalls  them.  Do  not  look 
upon  it  as  a  money-making  proposition  altogether  —  it  has  a 
much  wider  scope,  the  full  value  of  which  cannot,  however, 
be  realized  until  many  of  the  elements  of  commercialism  which 
now  impede  its  progress  are  eliminated  through  co-operative 
efforts. 


Accident  Underwriting 

BY 

B.  A.  PAGE 

Trie  Travelers  Insurance  Comt)any 


JANUARY  29.  1915 


One  who  carries  on  the  business  of  insurance  has  come  to 
be  known  as  an  underwriter.  The  term  was  first  used  in  con- 
nection with  marine  insurance.  The  several  persons  who  shared 
in  assuming  the  risk  of  a  proposed  voyage  wrote  their  names 
under  the  contract  of  insurance,  and  opposite  their  signatures 
the  amounts  for  which  each  was  bound  in  case  of  loss.  An 
underwriter,  from  the  Agent's  viewpoint,  is  one  who  for  inconse- 
quential reasons,  prevents  the  company  from  accepting  per- 
fectly good  business.  Accident  underwriting  may  be  considered 
as  an  art  to  be  acquired  by  experience  and  study. 

Accident  insurance  was  first  introduced  in  this  country 
in  1864.  For  several  years,  the  business  was  a  series  of  experi- 
ments. The  underwriter  had  little  to  guide  him  in  the  formula- 
tion of  policies,  the  making  of  rates  and  rules,  —  frequent 
changes  were  necessary,  —  policies  and  rates  were  announced 
only  to  be  withdrawn.  The  Companies  in  the  business  were 
swamped  with  a  flood  of  unworthy  and  fraudulent  claims. 
By  the  pioneer  company  (The  Travelers)  no  less  than  seven 
manuals  were  issued  during  the  years  1864  to  1868.  As  the 
writing  of  this  kind  of  insurance  advanced  changes  were  less 
frequent;  the  early  underwriter  learned  to  protect  his  company 
from  the  collective  hazard,  the  designs  of  unscrupulous  individu- 
als whose  purposes  were  speculative,  but  of  the  seventy  odd 
companies  organized  to  write  accident  insurance  in  the  United 
States  during  the  years  1864  to  1869  only  one  survived  beyond 
the  year  1870. 

Present  rates  are  based  upon  the  experience  on  hundreds 
of  thousands  of  risks,  and  are  advanced  or  decreased  as  the 
experience  shows  changes  to  be  necessary.  This  experience  is 
kept  on  a  completed  basis,  i.  e.,  all  policies  issued  and  renewed 
in  the  year  are  grouped  and  all  claims  arising  from  injuries 
sustained  during  the  term  of  such  policies  are  charged  to  the 
experience  of  that  year. 

It  is  essential  to  know  the  benefits  in  the  policies  under 
which  the  experience  was  obtained  to  draw  correct  conclusions. 
The  statistical  showing  cannot  be  regarded  as  conclusive,  when 


31 

applied  to  the  present-day  forms,  and  the  hazards  of  life  have 
changed  as  well. 

A  record  is  kept  of  accidents  ''foreign  to  occupation"  and 
those  "at  occupation."  It  shows  the  premiums  received  in  any 
given  year  or  term  of  3^ears  from  the  risks  in  each  occupation, 
and  the  losses  paid,  under  both  "at  occupation"  and  "foreign 
to  occupation"  claims. 

Under  the  "foreign  to  occuptaion"  claims,  sub-divisions 
are  made  of  accidents  "at  home,"  —  "on  the  street,"  —  "horse 
and  vehicle, ' '  —  '  'automobile, "  —  "  travel, "  —  '  'recreation, ' '  — 
"bic^^cles  and  motorcycles,"  etc.  The  following  table  will 
illustrate,  also  show  the  rise  in  certain  classes  of  accidents 
and  the  decline  in  others. 


TABLE  A. 

ACCIDENTS   RESULTING  FROM   CAUSES   TO   WHICH 
ALL  MEN  ARE  EXPOSED  WITHOUT  REGARD  TO 
THEIR  EMPLOYMENT  FOR  WHICH  THE 
TRAVELERS    PAID     CLAIMS     IN     1913 

Per  cent. 

Automobiles, 21.8 

Travel, 19.5 

At  Home, 16.9 

Sports  and  Recreation, 15.3 

Pedestrians, 13.8 

Horse  and  Vehicles, 3.5 

Bicycles  and  Motorcycles, 1.5 

Miscellaneous, 7.7 

CAUSES  OF  ACCIDENTS,  1913 


Automobiles, 
Travel,      .... 
At  Home, 

Sports  and  Recreation, 
Pedestrians,  . 


Number 

Amount 

Claims 

Paid 

1,762 

$312,51.7.78 

1,294 

279,595.47 

2,613 

241,384.11 

1,931 

218,554.04 

2,038 

197,342.71 

32 


Horses  and  Vehicles,      ....  631  50,259.34 

Miscellaneous, 765  100,286.69 

Bicycles  and  Motorcycles,        .      .  259  20,811.76 

Elevators, 45  10,779.42 

Occupation, 6,520  423,613.87 

Total 17,858  $1,855,145.19 


AUTO  ACCIDENTS,  1913 


Cranking,       .      .      .      . 
Foreign  matter  in  eye, 

Jolting, 

Entering  or  leaving. 
Skidding  or  ditching, 
Operating,      .      .      .      . 
Caretaking  or  repairing, 
Collisions,       .      .      .      . 
Around  Garage, 
Miscellaneous,     . 

Total,    . 


Number 

Amount 

Claims 

Paid 

723 

$61,820.89 

32 

1,065.97 

32 

2,384.00 

130 

18,948.65 

163 

110,124.83 

111 

23,312.34 

188 

7,929.68 

199 

74,794.48 

72 

2,780.73 

112 

9,356.21 

1,762 

$312,517.78 

AT  HOME  ACCIDENTS,  1913 


Burned  to  Death  in  Burning  House, 
Scalded  and  Burned   While   Cooking 

etc.,  Cleaning  Clothes,  etc.,    . 
Injured  while  working  around  barn, 

shed,  etc., 

Falls  on  stairs, 

Cutting  corns,  toe  nails,  finger  nails, 

Shaving,  

Slipped  in  bath  tub,       .... 
Slipped  on  rugs,  floor,  etc.. 
Falls  from  chairs,  tables,  etc.. 


Number 

Amount 

Claims 

Paid 

2 

$13,500.00 

161 

11,855.19 

377 

19,730.46 

369 

30,469.17 

45 

2,842.31 

54 

4,105.75 

57 

5,205.67 

115 

16,428.65 

59 

3,816.46 

33 


Run  into  beds,  bureaus,  doors,  etc., 
Cut  on  bottles,  sharp  instruments,  etc.. 
Slips  on  lawn,  etc.,         ..... 

Falls  from  ladders, 

Foreign  particles  in  eye. 
Hit  by  falling  objects,    .... 
Getting  in  and  out  of  bed. 
Poisoned  or  infected,      .... 
Finger  caught  in  door,  etc.. 
Stepped  on  broken  glass,  sharp  instru- 
ments, etc., 

Carving, 

Pet  animals'  bites,  etc.. 
Carrying  children,  finger  in  eye,  etc.. 
Lifting  and  moving  articles. 
Miscellaneous, 

Total, 


123 

5,340.86 

297 

11,702.15 

54 

3,661.64 

47 

3,737.45 

9 

595.72 

75 

5,878.48 

22 

2,755.19 

170 

16,682.43 

52 

4,666.25 

88 

3,329.17 

11 

287.34 

31 

833.92 

8 

2,392.90 

95 

4,512.54 

292 

67,054.41 

2,613 

$241,384.11 

ACCIDENTS  TO  PEDESTRIANS 


Struck  by  automobile,   . 
Struck  by  team,        .... 
Struck  by  bicycle  and  motorcycle 
Struck  by  train  and  street  car. 
Struck  by  falling  object,      . 

Bitten  by  dog, 

Slipped  on  ice  or  wet  pavement, 

Foreign  particles  in  eye, 

Fall   caused   by   uneven   ground 

curbing, 

Stepped  on  nail,  glass,  etc.. 
Stepped  on  by  horse. 
Fell  over  object  on  ground. 
Collisions  with  inanimate  objects, 
Collision  with  another  pedestrian, 
Miscellaneous 


and 


Total,   . 


Number 

Amount 

Claims 

Paid 

87 

$27,390.39 

21 

2,621.67 

35 

3,165.36 

37 

18,224.93 

45 

3,190.40 

37 

1,200.76 

627 

48,428.35 

113 

7,805.33 

413 

46,441.01 

75 

2,334.07 

8 

230.35 

181 

10,417.09 

53 

1,864.21 

21 

855.70 

285 

23,173.09 

2,038 

$197,342.71 

34 

HORSE  AND  VEHICLE  ACCIDENTS,  1913 

Number  Amount 

Claims  Paid 

Collisions  with  Automobiles,    . 

Runaways, 

Collisions, 

Defective  Appliances,    .... 

Getting  in  or  out, 

Shying,     ........ 

Horseback  Riding, 

Bites  and  Kicks, 

Working  around  vehicles,  etc.. 

Miscellaneous, 

Total, 


HORSE    AND    VEHICLE    AND    AUTO  ACCIDENTS  BY 
YEARS,  1902-1913,  INCLUSIVE 


8 

$      410.74 

130 

16,839.31 

41 

2,997.36 

20 

1,410.89 

75 

3,478.05 

57 

4,896.19 

108 

7,679.14 

76 

4,251.75 

16 

1,258.37 

100 

7,037.54 

631 

$50,259.34 

Horses  an 

id  Vehicles 

Automobiles 

Year 

Number 

Amount 

Number 

Amount 

902-1906 

4,117 

$441,620 

843 

$124,540 

1907 

1,056 

134,634 

384 

52,467 

1908 

873 

104,732 

498 

72,820 

1909 

801 

102,679 

708 

119,633 

1910 

897 

108,218 

1,163 

167,946 

1911 

877 

101,721 

1,239 

333,911 

1912 

953 

113,230 

1,525 

300,106 

1913 

631 

50,259 

1,762 

312,518 

On  the  assumption  that  exposure  to  accidents  "common 
to  all"  is  practically  the  same  for  all  risks,  the  rate  is  principally 
based  on  the  occupational  exposure,  and  how  widely  this  differs 
is  evident  from  the  fact  that  the  premium  varies  from  $5.00  to 
$30.00  for  each  $1,000  principal  sum  and  $5.00  weekly  indemnity. 

The  Manual  lists  over  six  thousand  occupations.  There 
are  ten  classes  within  which  nearly  all  occupations  come,  — 
special  hazards,  such  as  mining  and  certain  railway  operations 
requiring  special  combinations,  limits  and  rates.  The  regular 
classes  are  as  follows : 


35 


Ex.  Special 
Hazard- 
ous 

$15.00 
18.00 
24.00 

o 
o 

d 

CO 

CO  03 

$12.50 
15.00 
20.00 

s 

to 

^ 

$10.00 
12.00 
16.00 

20.00 
24.00 
28.00 

d 

CO 

sss 

o  o  o 
o  o  o 

o  o  o 
to  o  o 

o  o  o 

O  to  o 

t^  Oi  (N 

to  00  ^ 

^    rH   (M 

(M  TtH  l:^ 
CS|  (M  (M 

O  !>.  to 

CO  CO  Tt^ 

3 

a 

CO 

(N  to  O 

to  O  to 

»o  o  o 

I>  O  to 

o  to  O 
O  (M  to 

g^2 

<N  to  t^ 

T— (     T-H     1— 1 

00  o  oq 

to  i-H  t^ 

C^  CO  CO 

S 

SS8 

888 

888 

888 

888 

to  CO  00 

0(M^ 

1— 1   1— 1  rH 

to  CO  00 

1— 1   T-H  r— 1 

O  to  o 
C^  <M  CO 

to  o  o 

CO  "^  to 

Ordinary- 
Combi- 
nation 

to  o  o 

(M   rHOO 

to  <N  05 

>0  OO 

t^  CO  CO 

ss§ 

K8S 

8K8 

Tt^  to  CO 

00  O  tH 

T-i     T— 1 

(M  CO  to 

i—ir-ir-i 

t^  ^  to 
T-H  (N  (M 

Oi  rtH  (M 
(N  CO  '^ 

T— 1  CO  to 
to  CO  00 

c 

O 

to  o  o 

t^  to  o 

to  O  to 

to  O  O 
(M  O  to 

8SS 

<M  O  to 

8S8 

CO  Tt^  CO 

l>  Ol  O 
1—1 

r-H  (M  CO 

T— 1    T— 1    T— 1 

to  00  (M 

r-H    T-H   C^ 

CO  o  t^ 
(M  CO  CO 

to  o  to 

TJH  to  t^ 

Extra 
Preferred 

o  o  o 

O  CO  00 

o  o  o 

O  (M  tH 

O    O    O 

O  CO  00 

O  O  O 
O  O  O 

O  O  O 
OOO 

888 

CO  CO  TtH 

CO  t^  00 

Oi  Oi  O 

T— 1 

(N  to  00 

T-H   rH   i-H 

^  rtH  O 
(M  <M  CO 

CO  to  o 
CO  Tt^  CO 

Select 

and 

Preferred 

o  o  o 
to  o  o 

O  O  O 
O  O  O 

o  o  o 
to  o  o 

O  O  O 
O  to  O 

OOO 

to  o  o 

o  to  O 

(N  CO  rH 

to  CO  b- 

t^  00  05 

O  (M  to 

T— 1     T— 1     1-H 

t^  O  to 
^  (M  (N 

O  t^  O 

CO  CO  to 

S8S 

S8S 

to  o  o 

o  o  o 

O  to  o 

OOO 

to  o  o 

OOO 
O  to  o 

$500  and  $2 
600  and    3 
800  and    4 

000  and    5 
200  and    6 
400  and    7 

500  and    7 
600  and    8 
800  and    9 

000  and  10 
500  and  12 
000  and  15 

500  and  17 
000  and  20 
000  and  25 

000  and  30 
500  and  37 
000  and  50. 

i-H  rH  ^ 

^  ^  ^ 

(M  (M  CO 

CO  TtH  to 

CO  i:-  O 

1-H 

36 


ANNUAL  PREMIUMS  —  DEATH  ONLY 
Per  $1,000 


Premium 

Select  and  Preferred 

$2.50 

Extra  Preferred 

3.00 

Ordinary 

3.75 

Medium 

6.00 

Premium 
Special  $7.50 

Hazardous  9 .  00 

Extra  Hazardous  12 .  00 
Special  Hazardous  15 .  00 
Ex.SpecialHazardous  18.00 


SHORT  TERM  RATES 

To  be  written  only  on  "Select,"  "Preferred,"  "Extra  Pre- 
fered,"  and  "Ordinary"  risks,  all  to  be  classed  as  "Short  Term," 
and  insurance  not  to  exceed  $10,000  and  $50. 


Mos 

$1,000 

$1,000 

$1,000 

$1,000 

and  $5.00 

Death  only 

and  $5.00 

Death  only 

1. 

$1.50 

$0.90 

7 

$5.70 

$3.40 

2 

2.25 

1.35 

8 

6.10 

3.65 

3 

3.00 

1.80 

9 

6.50 

3.90 

4 

3.75 

2.25 

10 

6.90 

4.10 

5 

4.50 

2.70 

11 

7.20 

4.30 

6 

5.20 

3.10 

Recorded  experience  shows  that  exposure  to  accidental 
injury  changes  with  density  and  activity  of  population,  methods 
of  transportation,  the  scale  of  industrial  operations,  the  intro- 
duction of  new  servants  of  civilization,  such  as  electricity, 
and  their  attendant  employments,  and  changes  generally  in 
the  conditions  under  which  people  live  and  work. 

Prior  to  1908,  the  "Preferred"  class  was  a  profitable  one,  — 
with. the  more  hazardous  classes  showing  an  underwriting  loss. 
To  correct  this  inequality,  and  in  the  belief  that  each  class 
should  be  self-supporting,  the  rates  were  advanced  where  neces- 
sary, —  concurrently,  the  policies  for  the  Preferred  classes 
were  liberalized. 

The  introduction  of  the  automobile  as  a  pleasure  vehicle 
increased  the  "foreign  to  occupation"  exposure  of  Preferred  risks 
with  the  result  that  the  ratio  of  losses  to  premiums  on  this 
class  advanced  from  seven  to  ten  points. 

The  view  that  this  particular  hazard  has  reached  its  zenith 
and  will  subside  or  at  least  remain  stationary  as  time  goes 
on  is  a  reasonable  one.  Motor  cars  as  now  constructed  are  nearly 
mechanically  perfect.     The  owner-driver  is  no  longer  required 


37 

to  be  an  expert  mechanician.  The  invention  and  adoption  of 
self-starters  is  materially  reducing  the  danger  of  fractured  bones 
and  fatal  injuries  caused  by  cranking  accidents.  Laws  govern- 
ing vehicular  traffic  are  better  understood  by  driver  and  public 
alike. 

Accident  insurance  rates  are  practically  uniform  with  all 
companies.  The  International  Association  .of  Accident  Under- 
writers at  their  annual  convention,  held  at  Portland,  Me.,  July, 
1904,  appointed  a  Standard  Manual  Committee.  The  Manual 
prepared  by  the  Committee  has  been  adopted  by  nearly  all 
companies,  —  members  and  non-members,  —  its  adoption  being 
purely  voluntary,  and  the  printed  manual  or  the  plates  from 
which  it  may  be  printed  is  furnished  to  all  applying,  without 
charge  other  than  the  actual  expense. 

Familiarity  with  the  different  classifications  and  rates,  — 
the  manner  in  which  experience  is  compiled,  —  the  reserve  set 
aside  to  meet  the  various  contingencies  of  the  business,  is  neces- 
sary to  the  practice  of  underwriting. 

Underwriting  also  demands  a  knowledge  of  the  different 
applications  and  policy  forms ;  the  state  requirements  in  regard 
to  each  and  the  rules  and  rates  governing  each  territory. 

In  rating  and  selecting  risks  we  are  guided  by  precedents 
established  through  years  of  experience.  If  the  Manual  could 
be  followed  blindly,  underwriting,  in  so  far  as  classification  is 
concerned,  would  be  simple.  Risks  in  the  same  business  or 
occupation  differ  widely  as  to  duties  performed. 

An  investigation  of  an  applicant  whose  occupation  was 
given  as  President  Railroad  Company  (the  road  was  a  single 
track  one,  of  a  few  miles  in  length),  brought  out  the  information 
that  applicant  worked  daily  on  the  line  as  mixed  train  conductor 
and  baggage-master,  and  on  occasion  ran  the  engine. 

In  settling  a  claim  from  a  Hotel  Proprietor,  insured  at  Pre- 
ferred, it  was  disclosed  that  he  cleaned  the  cuspidors,  swept  out 
the  rooms, and  personally  met  every  train  with  a  pushcart  for 
the  purpose  of  seeing  that  his  guests'  baggage  was  safely  trans- 
ported to  the  hotel.  He  informed  us  that  this  was  quite  com- 
mon in  villages  in  the  northwest.  A  policyholder  with  occupa- 
tion given  as  collector  of  geological  data,  proved  on  investi- 
gation to  be  a  mining  engineer. 

New  exposures  must  be  recognized.  The  use  of  motorcycles 
by  policemen  brought  an  additional  hazard  into  that  occupa- 
tion, which  necessitated  an  advance  in  rate. 

It  is  a  curious  fact  that  no  applicant  ever  considers  his 
particular  occupation  as  hazardous.  The  freight  brakeman  will 
tell  you  in  good  faith  that  he  is  no  more  exposed  to  accidents 
than  the  bank  president  who  drives  his  own  auto,  but  the  ex- 
perience shows  that,  given  the  same  number  insured  in  both 
occupations,  there  will  be  thirty  freight  brakemen  to  one  banker, 
killed  by  accident. 


38 

The  rate  to  be  charged  is  a  frequent  bone  of  contention 
between  the  underwriter  and  the  agent.  It  is  a  rule  of  all 
accident  companies  that  where  an  applicant  is  engaged  in  two 
or  more  occupations,  he  must  be  rated  under  that  of  the  great- 
est hazard. 

If  there  is  a  question  as  to  which  rate  applies,  the  agent 
naturally  leans  toward  a  recommendation  of  the  lower  one  of 
the  two.  Or,  admitting  that  a  part  of  appHcant's  duties  call 
for  a  higher  classification,  asks  the  Company  to  write  the  risk 
at  the  lower  rate  with  an  agreement  that  claims  will  be 
prorated ;  that  is  to  say,  the  indemnity  will  be  reduced  if 
injuries  are  sustained  while  performing  the  more  hazardous 
part  of  his  duties,  to  an  amount  which  the  premium  paid  will 
purchase  at  the  rate  fixed  by  the  Company  for  the  more 
hazardous  exposure.  This  is  an  unsatisfactory  method  of  writing 
insurance,  for  in  the  event  of  an  accident  under  conditions 
calling  for  the  pro  rata  adjustment,  the  claimant  is  never  satisfied 
to  accept  less  than  the  full  amount,  even  though  the  insured 
agreed  in  advance  to  the  basis  on  which  the  insurance  was 
written  at  the  more  favorable  classification. 

Special  hazards  prevail  in  certain  localities.  In  rough,  or 
mountainous  country,  the  hazard  of  travel  on  foot,  by  horse  or 
mule-back,  or  in  automobile  is  much  greater  than  in  flat  ter- 
ritory. In  flat  country,  long,  level  stretches  of  roads  offer  a 
temptation  to  speed,  which  in  a  degree  counter-balances  the 
other  hazard. 

Homicides  are  on  the  increase  and  according  to  the  statis- 
ticians, occur  more  frequently  in  certain  sections  of  the  country 
than  in  other  sections.  This  hazard  can  be  guarded  against  to 
a  degree  by  selection,  but  is  better  met  by  limiting  the  form  of 
policy  contract,  to  one  which  by  its  terms,  does  not  cover,  or 
covers  only  for  a  limited  amount,  bodily  injuries  which  are  inten- 
tionally inflicted  upon  the  insured  by  another  person. 

Prior  to  1902,  the  applicant  for  an  accident  policy  was 
required  to  make  a  signed  application  for  the  insurance.  In 
1902  a  daily  report  form  was  adopted  which  called  only  for  the 
signature  of  the  agent.  The  signed  application  has  again  come 
into  use  within  the  past  two  years,  owing  to  the  enactment  in 
many  states  of  standard  provision  laws  which  prohibit  the  com- 
panies from  incorporating  in  the  policy  contract  any  statement 
made  by  the  applicant  for  the  insurance  unless  made  over  his 
signature. 

Policies  are  issued  and  based  on  the  information  given  in 
the  application  or  daily  report.  The  statements  made  therein 
are  of  the  greatest  importance.  A  misrepresentation  with 
intent  to  deceive,  or  materially  affecting  the  acceptance  of  the 
risk  or  the  hazard  assumed  by  the  company  nullifies  the  insur- 
ance.    See  Copy  of  Application. 


39 
TABLE  C 
APPLICATION. 

To  THE  Blank  Insurance  Company  : 

Application  is  hereby  made  for  a  Policy,  to  be  based  upon 
the  following  statement  of  facts.  The  falsity  of  any  statement 
in  this  application  shall  bar  the  right  to  recover  if  such  state- 
ment is  made  with  intent  to  deceive  or  materialy  affects  either 
the  acceptance  of  the  risk  or  the  hazard  assumed  by  the  Company. 

My  full  name  is    

A.  My  age  is ...Date  of  birth ...Place  of  birth..... 

(State  or  Country) 

B.  Color C.  Height. -feet -in.  D.  Weight.. lbs. 

E.     My  residence  is.. Street 

(City  or  Town) 
County  of.. ....Siate  of 


Policy  to  be 
payable  in 
case  of  death 
to 


Name 

Address 

,Age Height feet. in.  Weight... lbs. 


F.  Relationship  to  me  of  beneficiary  is  that  of. 

(member  of  firm) 

G.  I  am 

(employed  by) 
Whose  business  is  that  of 


Located  at Street,  Town  of State  of. 


H.  My  occupation  and  the  duties  thereof  are  fully  described 
as  follows : 


I.  My  average  weekly  earnings  exceed  the  single  weekly  indem- 
nity payable  under  this  policy  and  all  other  accident  policies 
now  carried  by  me. 

J.  I  have  no  life,  health,  or  accident  insurance  in  this  Company; 
no  accident  insurance  in  an}^  company  or  association;  have 
made  no  application  for  life  or  accident  insurance  upon  which 
I  have  not  been  notified  of  the  action  thereon;  nor  have  I  ever 
received  indemnity  for  any  accidental  injury  or  illness  except  as 
herein  stated: 


40 

K.  No  application  ever  made  by  me  for  life,  health  or  accident 
insurance  has  been  declined;  no  life,  health  or  accident  policy 
ever  issued  to  me  has  been  canceled ;  nor  has  any  renewal  thereof 
been  refused  by  this  or  any  other  company  or  association  ex- 
cept as  herein  stated: 


L.  I  have  not  in  contemplation  any  special  journey  or  any 
hazardous  undertaking,  nor  do  I  drive  or  operate  an  automo- 
bile, motorc3^cle  or  aeroplane,  except  as  herein  stated : 

M.  My  habits  are  temperate ;  I  am  sound  physically  and  men- 
tally; I  am  not  maimed  or  deformed;  I  have  no  impairment  of 
sight  or  hearing;  I  have  never  had  a  hernia  or  worn  a  truss; 
I  have  never  had  epilepsy,  vertigo,  diabetes,  syphiHs,  tuber- 
culosis, mental  disorder  or  any  disease  of  the  brain  or  nervous 
system,  except  as  herein  stated: 


N.  I  have  had  no  medical  or  surgical  advice  or  treatment,  nor 
have  I  suffered  from  any  local  or  constitutional  disease,  within 
the  past  five  years,  except  as  herein  stated: 

In.... for lasting 

(State  year)         (State  disability)  (State  duration) 

O.     I  have  never  undergone  surgical  operation,  except  as  herein 
stated : 

Date ..-For 

Result 

P.  I  have  not  been  exposed  during  the  last  ten  days  to  any 
contagious  or  infectious  disease,  except  as  herein  stated : 


Policy  applied  for  this day  of.. 19  . 

Sign  here 

Applicant. 

The  application  calls  for  the  full  name  of  applicant,  his 
age,  weight,  height,  occupation  and  duties,  —  a  statement  as 
to  other  insurance  carried ,  —  any  indemnities  received  in  the 
past,  —  that  his  habits  are  correct  and  temperate,  —  any 
physical  or  mental  impairment,  and  the  name  and  relationship 
of  the  beneficiary. 

The  underwriter  must  take  all  points  into  consideration, 
the  location  of  the  risk,  size  of  the  concern  owned  or  connected 
with,  the  commercial  rating,  age,  height  and  weight,  any  physi- 
cal impairment  and  be  governed  thereby  in  his  action  on  the 


41 


application.  He  must  be  able  to  determine  correctly  in  the 
majority   of  cases  that   the   risk  will  prove  a  standard  one. 

The  reserve  on  the  premiums  from  one  thousand  Preferred 
risks  is  required  to  meet  one  death  loss  for  the  minimum  am.ount, 
and  on  two  thousand  risks  to  meet  one  death  loss  for  the  maxi- 
mum amount,  this,  without  taking  into  account  the  accumulative 
feature  of  the  poHcy.  The  underwriter  is  not  warranted  in 
taking  undue  chances. 

The  age  limit  is  eighteen  to  sixty-five  for  new  risks. 
After  an  individual  has  passed  the  age  of  sixty-five,  he  is  not 
considered  a  standard  risk  for  new  insurance.  Insurance  is  con- 
tinued on  renewal  risks  up  to  age  seventy,  subject  to  yearly 
statem.ent  of  health. 

If  the  applicant  is  over-weight  his  waist  and  chest  measure- 
ments must  be  secured  with  a  statement  as  to  his  general  con- 
dition. If  his  waist  measures  less  than  his  chest,  and  muscles 
are  firm,  and  occupation  and  age  are  favorable,  the  insurance 
may  be  issued.     See  Table  Height  and  Weight. 

TABLE  D 

HEIGHT  AND  WEIGHT 

Applications  of  persons  who  are  more  than  forty  per  cent, 
over  or  twenty-five  per  cent,  under- weight  must  be  submitted 
to  the  Company  for  approval  accompanied  by  full  statement 
in  regard  to  the  physical  condition  of  applicant,  with  waist  and 
chest  measure.  No  risk  more  than  sixty  per  cent  over- weight 
will  be  accepted. 


Height 

25  Per  Cent. 
Under-weight 

American 
Standard  Aver- 
age Weight 

40  Per  Cent. 
Over-weight 

Feet.  Inches 

5 

86 

115 

161 

5         1 

90 

120 

168 

5         2 

94 

125 

175 

5         3 

97 

130 

182 

5        4 

101 

135 

189 

5         5 

105 

140 

196 

5         6 

107 

143 

200 

5         7 

109 

145 

203 

5         8 

111 

148 

208 

5         9 

116 

155 

217 

5       10 

120 

160 

224 

5       11 

124 

165 

231 

6 

127 

170 

238 

6         1 

131 

175 

245 

6        2 

135 

180 

252 

42 

Because  of  the  great  likelihood  of  a  recurrence,  those  who 
suffer  a  dislocation  of  the  shoulder  have  attached  to  the  policy 
a  rider  eliminating  claims  for  future  dislocation  of  the  sam^e 
shoulder.  This  rider  is  sometimes  removed  after  two  years 
if  there  has  been  no  recurrence. 

Applicants  who  have  a  hernia  should  not  be  insured  with- 
out the  execution  of  a  rider,  excluding  death  or  disability  result- 
ing from  hernia.  It  is  not  unusual  for  a  hernia  to  cause  death, 
due  to  strangulation. 

The  question  of  disease  in  its  relations  to  eligibility  for 
accident  insurance  is  a  matter  of  increasing  and  vital  importance, 
since  accident  policies  from  year  to  year  contain  fewer  and 
few^er  restrictions. 

It  is  not  alone  a  matter  affecting  the  claim  record  of  the 
com.pany,  and  of  the  individual  insured,  but  in  its  ultimate 
result  affects  both  the  prestige  of  the  agent  with  his  company, 
and  his  friendly  relations  with  his  clients.  Since  policies  are 
issued  without  medical  exam.ination  or  inspection,  the  under- 
writer miust  depend  largely  upon  the  agent,  and  the  keen 
observer  who  notes  and  reports  conditions  as  they  exist  in 
regard  to  the  physical  hazard,  in  addition  to  the  occupational 
hazard,  is  the  one  upon  whom  the  underwriter  lays  his  full 
reliance  at  all  times  and  who  consequently  receives  as  liberal 
action  on  all  cases  as  is  possible. 

Although  practically  all  formes  of  disease-  may  have  some 
effect  upon  the  desirability  of  an  accident  risk,  there  are  certain 
types  of  disease  which  are  more  material  than  others.  Among 
these  may  be  mentioned  a  history  of  epilepsy,  vertigo  or  faint- 
ing spells;  of  insanity,  nervous  prostration,  locomotor-ataxia, 
hysteria  and  paralysis  in  any  form;  rheumatism;  gout;  heart 
disease;  diabetes;  arterio-sclerosis ;  Bright 's  disease;  history  of 
syphilis;  history  of  iritis  or  corneal  ulcer;  cateract;  cancer; 
tuberculosis;  fistula;  gall  stones;  varicose  veins  and  history 
of  intestinal  obstruction. 

The  importance  of  epilepsy,  vertigo  or  fainting  spells, 
locomxOtor-ataxia  and  heart  disease  is  readily  apparent  because 
of  the  well-known  likeHhood  of  injuries  occurring  as  the 
result  of  a  fall  dependent  upon  any  one  of  these  conditions, 
rather  than  as  the  result  of  accidental  means. 

Nervous  prostration  and  hysteria  are  of  very  great  import- 
tance  in  connection  with  accident  insurance  because  of  the  great 
likelihood  of  injuries,  which,  in  the  normal  individual  would 
result  in  disability  of  minor  importance,  being  very  greatly 
prolonged  as  a  result  of  neurasthenia  or  hysterical  tendencies. 
This  is  particularly  true  in  that  class  of  accidents  which  would 
normally  result  in  a  greater  or  lesser  degree  of  shock  to  the 
nervous  system ;  such  as  railway  wrecks,  —  the  condition  of 
so  called  railway  spine  being  a  common  instance  of  traumatic 
neurasthenia  or  traumatic  hysteria. 


43 

Rheumatism  and  gout  are  of  importance  because  of  the 
very  great  Hkelihood  of  minor  contusions  and  sprains  resulting 
in  an  exacerbation  of  an  existing  sub-acute  rheumatic  or  gouty- 
condition,  —  at  timics,  in  fact,  serving  as  an  exciting  cause  for 
a  prolonged  disability,  in  reality  primarily  due  to  the  condition 
of  disease. 

Bright's  disease,  syphilis  and  diabetes,  particularly  the 
latter,  greatly  retard  the  process  of  healing  of  wounds  or  the 
repair  of  an  injured  part.  This  also  applies  to  arterio-sclerosis 
(hardening  of  arteries),  which  indicates  advanced  tissue  change 
and  is  of  special  importance  because  of  frequency  of  improper 
claims  for  apoplexy,  alleged  to  be  due  to  trauma. 

The  history  of  iritis,  or  of  corneal  ulcer  is  always  worthy 
of  mention  and  investigation,  because  these  conditions  result 
frequently  from  disease  as  well  as  from  injuries,  and  when  such 
a  condition  has  occurred  as  a  result  of  disease,  there  is  a  very 
great  likelihood  of  a  recurrence  upon  the  receipt  of  a  miinor 
injury  which  would  have  had  little  effect  upon  a  normal  eye. 

Tuberculosis  is  of  special  importance  as  regards  two  of 
the  forms  in  which  it  affects  the  human  race.  An  applicant 
who  has  at  any  tim.e  suffered  from  tuberculosis  of  the  bone, 
whether  of  the  extremities  or  of  the  'spine,  is  not  a  desirable 
risk,  for  the  reason  that  although  it  may  appear  that  com^plete 
healing  has  long  ago  taken  place  and  the  disease  process  has 
been  quiescent  for  years,  the  reception  of  a  slight  blow  upon 
the  part  frequently  brings  to  light  an  old,  apparently  healed 
focus  of  disease,  and  the  individual  is  apt  to  suffer  from  the 
same  to  an  even  greater  extent  than  before;  while  one  who  is 
suffering  or  has  in  the  past  suffered  from  tuberculosis,  is  liable 
to  pulmonary  hemorrhage,  which  condition  is  frequently 
claimed  to  have  occurred  as  the  result  of  an  injury,  such  as 
a  fall,  while  in  fact  the  alleged  injury  served  as  an  exciting  cause 
only,  and  not  a  primary  one,  and  the  result  does  not  properly 
come  within  the  scope  of  an  accident  policy.  All  cases  of  hunch- 
backs are  to  be  looked  upon  as  particularly  suspicious  of 
tubercular  disease  of  the  bone. 

There  is  a  curious  condition  known  as  Hemophilia  in 
which  the  blood  lacks  power  to  clot.  These  individuals  are 
commonly  known  as   "bleeders"   and   are  not  insurable. 

Varicose  veins  greatly  delay  the  healing  of  injured  parts 
because  of  the  obstruction  to  circulation. 

Intestinal  obstruction  very  frequently  occurs  as  a  result 
of  malformation  of  the  intestines  dependent  upon  a  deformity 
or  pre-existing  disease,  —  resulting  in  death  following  strains, 
blows,  etc. 

The  age  limit  of  seventy  in  accident  policies  is  based  on 
the  theory  that  after  a  man  reaches  seventy  he  is  no  longer 
insurable.  If  a  person  of  fifty  has  the  heart,  kidneys  and  arteries 
of  the  man  of  seventy,  he  is  no  more  insurable  than  the  latter. 


44 

An  insured  died  from  hypostatic  pneumonia,  the  attending 
physician  stating  that  there  was  kidney  insufficiency.  For 
some  time,  the  insured  had  been  in  poor  physical  condition. 
On  the  day  of  his  injury,  he  was  at  home  where  he  fell  and 
fractured  his  collarbone,  which  confined  him  to  his  bed,  and 
it  was  claimed,  that  while  there  was  no  connection  between 
the  fracture  and  the  pneumonia,  that  the  bed  confinement 
to  one  in  his  condition  resulted  in  the  fatal  disease.  It  was 
admitted  that  physically  the  insured  was  as  old  as  eighty- 
five  or  ninety  although  his  actual  age  was  sixty-six. 

Much  mxore  could  be  said  of  the  relations  which  physical 
conditions  have  to  the  insurability  of  risks,  but  time  forbids. 
The  foregoing  have  been  pointed  out  to  show  the  number  and 
variety  of  facts  by  which  a  risk  may  be  affected,  and  the  impor- 
tance of  full  knowledge  of  the  facts  by  the  underwriter  in 
order  that  he  may  consider  and  compare  them  and  estimate 
whether  the  applicant  should  be  regarded  as  standard  or 
impaired. 

Accident  insurance  was  designed  primarily  to  compensate 
the  insured  for  loss  of  business  time.  It  was  never  intended 
as  a  bonus  or  to  put  a  premium  on  injury.  The  specific  amounts 
paid  immediately  for  accidental  loss  of  limbs  or  eye-sight,  the 
optional  benefits  for  certain  fractures  and  dislocations,  are  a 
commutation  of  the  amount  which  would  otherwise  be  paid 
under  the  weekly  indemnity  feature. 

No  insurance  undertaking  will  succeed  unless  it  can  pro- 
tect itself  against  fraud.  Those  who  apply  for  insurance, 
especially  strangers,  without  solicitation,  must  be  carefully 
investigated  before  acceptance.  Fraudulent  claims  against 
accident  companies  are  not  uncommon. 

A  case  occurs  frequently  of  a  risk  who  has  loaded  up  with 
an  amount  of  indemnity  in  excess  of  his  earning  ability  and 
feigning  a  back  or  shoulder  injury,  usually  ascribed  to  a  fall 
while  traveling  on  a  public  conveyance,  spends  a  period  of  leisure 
at  the  expense  of  the  insurance  company. 

A  more  serious  fraud  is  that  of  intentional  self -mutilation 
or  intentional  self-destruction,  after  large  amounts  of  insurance 
have  been  obtained  by  false  representations  as  to  earnings  and 
finances. 

It  is  to  guard  against  frauds  of  this  kind  that  the  insurance 
offices  must  use  their  greatest  diligence.  In  this,  as  in  the 
matter  of  securing  proper  rates,  the  co-operation  of  a  corps  of 
experienced  representatives  is  invaluable. 

The  insurance  company  is  organized  to  furnish  protection 
for  which  there  is  legitimate  need,  and  if  possible,  anticipate 
the  demand,  conditional  upon  its  being  able  to  secure  an  average 
of  experience. 


45 

There  is  a  class  of  risks  who  care  nothing  about  the  weekly 
indemnity  feature,  but  who  wish  large  protection  for  the  more 
serious  accidents.  This  led  to  the  formulation  of  a  policy  which 
should  cover  only  death  and  dismemberment  losses. 

When  aviation  first  came  into  prominence,  the  insurance 
of  this  new  hazard  was  taken  into  consideration.  It  was  decided 
that  the  danger  of  injury  was  too  great  and  the  number  of  risks 
to  be  insured  too  small  to  warrant  the  writing  of  the  insurance. 

The  number  and  seriousness  of  motor-car  accidents  created 
a  demand  for  increased  protection  on  the  part  of  those  using 
them,  and  a  rider  was  prepared  which,  for  an  additional  premium 
of  40%,  doubled  the  insurance  if  injury  was  sustained  while 
riding  in,  operating  or  caring  for  an  automobile.  It  was  estimated 
that  this  rate  should  be  adequate  to  cover  one  class  of  accidents. 

The  estimate  proved  to  be  wrong,  with  the  consequence 
that  the  rider  was  withdrawn.  This  experience  was  undoubtedly 
partly  due  to  the  selection  against  the  companies. 

It  is  occasionally  necessary  to  fit  the  policy  to  the  risk.  A 
policyholder  had  developed  marked  choreic  movements  which 
appeared  to  be  limited  to  the  left  shoulder  and  the  upper  arm; 
also  an  irregular  heart  action.  Insurance  granting  death  benefit 
could  not  be  continued  on  account  of  the  heart  condition,  but 
as  the  choreic  movements  were  not  of  any  special  moment  the 
insurance  was  accepted  under  a  dismemberment  and  disable- 
ment policy. 

In  the  handling  of  a  business  calling  for  the  underwriting 
of  sixty  thousand  new  risks  a  year,  less  than  5%  are  rejected  or 
rated  up. 

The  policy  should  contain  all  that  the  Company  can  afford 
to  offer  for  the  premium  it  is  to  charge,  but  care  should  be  tc  ken 
not  to  go  so  far  in  liberalizations  ;  as  to  place  the  Company  in  a 
position  where  it  is  no  longer  able  to  give  its  claimants  the 
benefit  of  the  doubt  where  one  exists. 

By  exercising  moderation  in  this  respect,  the  underwriter 
will  make  and  keep  friends  for  his  company  and  the  business  as 
a  whole. 


Tne  Accident  Policy 

BY 

A.  p.  WOODWARD 

TKe   Connecticut  General  Life  Insurance  Com{)any 


FEBRUARY  5.  1915 


I  have  taken  as  the  basis  for  our  discussion  of  The  Acci- 
dent PoHcy  the  form  which  can  most  nearly  be  designated  as 
a  ''standard  policy,"  and  which  with  but  slight  modifications 
is  used  by  all  companies;  and  I  have  used  the  particular  edition 
of  that  policy  prepared  for  use  in  Connecticut  under  the  latest 
Standard  Provision  Act,  regulating  accident  insurance  polices, 
which  Act  is  practically  uniform  in  a  number  of  the  states. 
This  policy  is  the  Etna's  "Accumulative  Accident  PoHcy," 
Form  BG,  the  Connecticut  General's  "General  Accident  Policy," 
Form  GB,  the  Hartford  Indemnity's  "Hartford  Accident 
Policy,"  Form  HA,  and  the  Travelers  "Special  Accumulative 
Accident  Policy,"  Form  ED.  The  premium  rates  and  the 
insurance   benefits   in   these   policies   are   uniform. 


APPLICATION. 

The  foundation  upon  which  an  accident  policy  rests  is 
the  application,  a  copy  of  which  is  expressly  made  part  of  the 
policy,  hence  a  logical  analysis  will  consider  it  first.  The 
statements  made  in  the  application  may  for  our  purposes  be 
divided 'into  three  classes,  to  wit:  identification,  exposure,  and 
physical   condition   of  the   risk. 

Under  identification  I  include  the  name,  residence  and 
physical  description  of  the  insured,  the  name,  address  and 
relationship  of  the  beneficiary,  and  the  direction  for  the  pay- 
ment of  benefits.  While  essential  to  the  contract  of  insurance, 
they  do  not  demand  consideration  in  this  discussion. 

Under  exposure  I  have  grouped  the  statements  describing 
the  occupation  and  business  duties  of  the  insured,  any  specific 
undertaking  that  he  may  be  temporarily  engaged  in,  his  finan- 
cial condition  as  measured  by  his  earnings  resulting  from  his 
occupation,  and  an  enumeration  of  such  other  insurance  as 
he  may  carry. 

The  description  of  occupation  and  duties  controls  not  only 
the  premium  rate  at  the  time  the  policy  is  issued;  but  by  the 
terms  of  the  policy  also  directly  controls  the  payments  of 
benefits     provided     by     it.     It     is     therefore  essential     that 


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these  statements  be  full  and  specific  and  not  expressed  in 
general  terms.  It  frequently  occurs  that  the  applicant  regularly 
engages  in  duties  not  ordinarily  understood  as  coming  within 
the  title  of  his  occupation,  which  duties  increase  the  hazards 
to  which  the  insured  is  exposed.  The  company  may  have  no 
knowledge  of  this  at  the  time  of  issuing  the  policy,  and  there 
may  be  nothing  to  put  it  upon  its  guard  or  suggest  the  necessity 
of  investigating  the  accuracy  of  the  statements.  This  applies 
likewise  to  the  description  of  any  temporary  undertaking. 

The  statements  describing  the  physical  condition  of  the 
risk,  to  wit:  age,  height,  weight,  bodily  and  mental  condition 
(impairments  or  infirmities,  if  any  exist),  medical  treatment 
and  previous  claim  experience  with  other  companies,  go  to  the 
the  very  existence  of  the  contract  itself.  A  clause  similar  to 
the  following  is  a  part  of  all  applications;  "I  understand  and 
agree  that  the  right  to  recover  under  any  policy  which  may  be 
issued  on  the  basis  of  this  application  shall  be  barred  in  the 
event  that  any  one  of  the  above  statements  material  either  to 
the  acceptance  of  the  risk  or  to  the  hazard  assumed  by  the  com- 
pany is  false,  or  in  the  event  of  any  one  of  the  above  statements 
is  false  and  made  with  the  intent  to  deceive."  No  medical 
examination  of  the  applicant  is  made,  nor  could  the  company 
afford  to  examine  the  applicants  without  materially  increasing 
the  premium  rate.  It  must  assume,  unless  the  applicant  states 
to  the  contrary,  that  the  risk  is  unimpaired  in  any  respect. 
Should  it  develop  that  the  risk  was  impaired  at  the  time  the 
application  was  made,  it  would  make  no  difference  whether 
the  insured  intentionally  or  unintentionally  failed  to  state  the 
impairment.  A  policy  issued  under  these  circumstances  is 
a  contract  made  through  fraud  or  mistake,  and  such  contracts 
are  voidable  by  the  party  who  has  been  misled;  and  the  party 
who  remains  silent  when  it  is  his  duty  to  speak,  or  who  misstates 
the  facts,  must  suffer  the  consequences. 

CONSIDERATION  CLAUSE. 

A  promise  to  do  certain  things  in  the  future  is  not  binding 
unless  there  be  some  valuable  consideration  for  its  making. 
In  all  insurance  contracts  this  consideration  passes  from  the 
insured  to  the  insuring  company,  and  in  the  policies  we  are 
discussing,  consists  of  the  premium  and  the  statements  con- 
tained in  the  copy  of  the  application  m.ade  a  part  of  the  policy. 
This  clause  is  variously  placed  either  at  the  beginning  or  ending 
of  the  policy. 

TERM. 

For  the  consideration  the  company  promises  certain  indem- 
nities if  certain  events  occur  during  the  policy  term.  This 
term  is,  except  in  very  rare  instances,  either  three,  six  or  twelve 
months.     At  the  expiration  of  the  term  for  which  it  is  issued, 


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the  policy  terminates,  and  the  insurance  provided  by  it  can 
only  be  continued  by  the  mutual  agreement  of  the  contracting 
parties.  This  must  be  evidenced  on  the  part  of  the  company 
by  some  act  indicating  its  willingness  to  continue  the  insurance 
(usually  by  issuing  a  renewal  receipt) .  The  insured  in  turn  must 
indicate  his  willingness  to  continue  the  insurance  by  accepting 
the  renewal  receipt  and  paying  the  premium  for  the  additional 
term.  If  these  several  actions  occur,  the  contract  is  continued 
in  force  for  another  term,  and  the  transaction  is  customarily 
referred  to  as  a  renewal  of  the  policy. 

INSURING  CLAUSE. 

This  brings  us  to  a  consideration  of  the  insuring  clause 
of  the  policy.  I  notice  from  the  Schedule  of  Lectures  of  the 
Institute  that  Mr.  Cornelius  is  to  talk  next  week  on  this  topic 
so  that  any  extended  analysis  of  it  is  properly  left  for  him.  It 
is  necessary,  however,  to  briefly  define  it  at  this  time  for  the 
reason  that  every  provision  of  benefits  in  the  policy  refers 
back  to  this  clause  and  is  dependent  upon  its  interpretation. 

The  policy  is  termed  an  accident  policy,  which  is  in  itself 
slightly  misleading. 

Let  me  quote  the  language  used  in  the  various  policies  we 
have  taken  for  analysis. 

^TNA.  "Does  hereby  insure  *  *  *  against  loss 
resulting  directly  and  independently  of  all  other  causes,  from 
bodily  injuries  effected  solely  through  external,  violent  and 
accidental  means,     *     *     *     ." 

Connecticut  General.  "Does  hereby  insure  *  *  * 
against  loss  resulting  from  bodily  injuries  effected  directly 
and  independently  of  all  other  causes  through  accidental 
means,     *     *     *     /' 

Hartford  Indemnity.  "Hereby  insures  *  *  *  against 
loss  caused  directly  and  exclusively  by  bodily  injury  sustained, 
solely  and  independently  of  all  other  causes,  through  acci- 
dental means,     *     *     *     ." 

Travelers.  "Does  hereby  insure  *  *  *  against  loss 
resulting  from  bodily  injuries,  effected  directly  and  independent- 
ly of  all  other  causes  through  external,  violent  and  accidental 
means,     *     *     *     ." 

The  difference  in  phraseology  is  immaterial;  it  becomes 
apparent  that  the  insurance  is  not  against  loss  due  to  "accidents" 
but  to  losses  due  to  "accidental  means,"  and  therein  lies  a  dis- 
tinction frequently  not  appreciated.  Webster  defines  "acci- 
dent" as  "an  unexpected  event,  casualty  or  contingency." 
This  unexpected  event  may  be  the  unforeseen  or  unlooked  for 
consequence  of  an  intentional  act  of  the  insured ;     or  it  may  be 


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the  consequence  of  unintentional  acts  of  the  insured  or  of  causes 
not  within  his  control.  It  is  only  the  latter  group  of  "accidents" 
which  fall  within  the  scope  of  the  policy.  One  of  the  earliest 
cases  construing  an  accident  policy,  decided  by  the  Supreme 
Court  of  the  United  States,  laid  down  this  rule:  "That  if  a 
result  is  such  as  follows  from  ordinary  means  voluntarily  em- 
ployed in  not  an  unusual  and  unexpected  way,  it  cannot  be  as 
a  result  effected  by  accidental  means,  but  if  in  the  act  which 
precedes  the  injury  something  unforeseen,  unexpected,  unusual 
occurs  which  produces  the  injury,  then  the  injury  has  resulted 
from  accidental  means." 

Note  this  language,  "If  in  the  act  which  precedes  the  injury 
something  unforeseen,  unexpected,  unusual  occurs" — not  if 
the  injury  is  unexpected  but  the  act  preceding  it. 

In  several  of  the  policies  the  words  "accidental  m^eans" 
are  coupled  with  the  words  "external  and  violent."  Until 
quite  recently  this  phraseology,  "external,  violent  and  accidental 
means,"  was  used  in  all  insuring  clauses  in  all  polices.  These 
words,  "external  and  violent"  are  now  eliminated  in  a  great 
many  policies.  In  my  opinion  they  neither  enlarge  nor  limit 
the  words  "accidental  m.eans." 

Further  examination  of  the  insuring  clause  discloses  another 
condition.  Not  only  m^ust  the  bodily  injuries  be  effected  by 
accidental  m.eans,  but  this  agency  must  act  directly  and  inde- 
pendently without  the  intervention  of  any  other  agencies,  i.e., 
any  pre-existing  infirmnty  or  disease. 

CONTRACT  OF  INDEMNITY. 

Having  determined  that  the  insured  has  suffered  bodily 
injuries,  effected  through  accidental  m.eans  within  the  mean- 
ing of  the  policy,  we  must  go  one  step  further  and  determine 
if  a  loss  resulted  from  the  injuries.  The  policy  is  a  contract 
of  indemnity.  Unless  the  insured  suffers  some  loss  defined  in 
the  policy,  there  can  be  no  recovery.  It  does  not  insure  against 
injuries,  hence  no  matter  how  severe  those  injuries  may  be,  if 
they  result  only  in  pain  or  inconvenience,  there  is  no  liabiHty  on 
the  part  of  the  company  for  any  indemnity. 

SPECIFIC  LOSSES. 

The  policy  provides  a  schedule  of  fixed  indemnities  for 
certain  specific  losses  that  could  not  otherwise  be  definitely  ot 
satisfactorily  measured  in  dollars  and  cents  at  the  time  of  their- 
occurrence,  such  as  loss  of  life,  limb  or  sight.  There  is  some 
slight  variation  in  the  amounts  paid  for  these  losses,  some 
policies  making  a  distinction  between  the  right  and  the  left 
hand;  but  these  differences  are  not  of  importance  for  this 
discussion.     The  principal  sum   is   paid  for  loss   of  life,   both 


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hands,  both  feet,  a  hand  and  a  foot,  or  a  hand  or  foot  and  an 
eye:  one-half  of  the  principal  sum  for  either  hand,  foot  or  an 
eye,  and  some  of  the  policies  pay  one-third  of  the  principal 
sum  for  loss  of  thumb  and  index  finger,  or  for  speech  or  hearing. 

These  losses  must  result  from  the  bodily  injuries  alone 
without  complication  from  any  pre-existing  infirmity.  Like- 
wise the  possibility  of  any  subsequently  acquired  infirmity 
complicating   or   in   part   causing   the   loss   must  be  excluded. 

For  that  reason  it  is  necessary  to  link  the  cause  and  effect 
together  in  point  of  tim^e  so  as  to  reasonably  protect  both  the 
insured  and  the  company.  Sufficient  time  must  elapse  to 
allow  the  injury  to  develop  and  for  such  surgical  attention  as 
it  may  necessitate;  and  on  the  other  hand,  the  period  of  time 
elapsing  between  the  cause  and  effect  must  be  sufficiently 
short  to  exclude  any  question  of  doubt  as  to  the  cause  of  the 
loss.  If  this  were  otherwise,  the  policy  wotild  cease  to  be 
definite  and  claim  settlements  would  be  the  subject  of  unend- 
ing controversy.  Therefore,  the  policy  provides  that  the  loss 
shall  occur  within  ninety  days  from  the  date  of  the  accident.  Bear 
in  mind  the  reason  for  this  ninety  day  limit.  It  is  primarily 
to  connect  the  loss  with  the  injury;  to  make  certain  that  the 
loss  has  resulted  from  bodily  injuries  independently  and  exclu- 
sively of  all  other  causes  —  not  to  limit  liability.  If,  therefore 
the  injury  and  the  loss  are  connected  by  some  unbroken  chain 
of  events,  the  reason  for  the  ninety  day  limitation  ceases  to 
exist,  and  w^e  find  it  removed  by  a  clause  in  this  provision  for 
specific  benefits  which  we  are  considering.  This  clause  provides 
that  if  from  the  date  of  the  accident,  the  injuries  continuously 
and  totally  disable  the  insured,  and  during  the  period  of  total 
disability  result  in  any  one  of  these  losses,  the  principal  sum, 
or  the  proportion  of  it  provided  for  the  particular  loss  occurring, 
will  be  paid  and  in  addition  weekly  indemnity  for  such  disabil- 
ity as  the  insured  shall  have  suffered  from  the  date  of  the  acci- 
dent to  the  time  of  the  loss,  Again,  a  limit  for  the  purpose 
of  making  the  contract  definite  and  so  avoiding  controversy 
becomes  necessary,  and  the  limit  within  which  this  loss  must 
occur  has  been  fixed  at  four  years  or  two  hundred  weeks,  as 
it  seems  inconceivable  that  either  death  or  loss  of  limb  or  sight 
resulting  after  the  lapse  of  four  years  could  be  due  to  the  injuries 
alone  without  the  intervention  of  some  other  cause.  One 
form  of  policy  does  not  contain  this  limit. 

WEEKLY  INDEMNITY. 

It  is  only  a  sm.all  percentage  of  injuries  that  result  in  any 
one  of  the  losses  we  have  been  considering.  The  large  percen- 
tage cause  but  temporary  disability  and  come  within  the  pro- 
visions of  the  policy  providing  weekly  indemnity.  Two  classes 
of  disability  are  recognized  by  the  policy  —  total  and  partial. 


51 

The  bodily  injuries  alone,  without  the  intervention  of 
either  pre-existing  or  subsequently  acquired  infirmities,  as  in 
the  case  of  the  specific  losses,  must  cause  the  disability,  and 
again  we  find  the  cause  and  effect  linked  together  in  point  of 
time.  I  again  quote  the  phraseology  of  the  policies  we  are 
using  for  this  analysis. 

TOTAL  DISABILITY. 

^TNA.  "If  such  injuries  *  *  *  alone  totally  disable 
the  Insured,  that  is,  from  the  date  of  the  accident  continuously 
and  wholly  prevent  him  from  prosecuting  any  and  every  kind 
of  business  pertaining  to  his  occupation,  the  Company  will 
pay     *     *     *      " 

Connecticut  General.  "Or  if  such  injuries  alone,  inde- 
pendently and  exculsively  of  all  other  causes,  shall  from  the 
date  of  the  accident  wholly  and  continuously  prevent  the 
Insured  from  performing  any  and  every  kind  of  duty  pertaining 
to  his  occupation,  the  Company  will  pay     *     *     *     ." 

Hartford  Indemnity.  "If  such  injury  shall  immediately, 
continuously  and  totally  disable  and  prevent  the  Insured  from 
transacting  every  kind  of  duty  pertaining  to  his  occupation, 
the  Company  will  pay     *     *     *     ." 

Travelers.  "Or,  if  such  injuries,  independently  and  exclu- 
sively of  all  other  causes,  shall  wholly  and  continuously  disable 
the  Insured  from  the  date  of  the  accident  from  performing 
any  and  every  kind  of  duty  pertaining  to  his  occupation,  the 
Company  will  pay     *     *     *     ." 

The  same  thought  is  expressed  by  all,  the  only  difference 
in  the  language  employed  is  the  interchange  of  the  word  "imme- 
diatety"  for  the  phrase, "From  the  date  of  the  accident." 

This  provision  lays  down  three  conditions  by  which  each 
given  set  of  facts  are  to  be  measured  to  determine  the  respective 
rights  of  the  Insured  and  the  Com.pany. 

First.  It  defines  total  disability  as  that  condition  which 
wholly  or  completely  prevents  the  insured  from  attending  to, 
performing  or  transacting,  any  and  every  kind  of  duty  pertaining 
to  his  occupation. 

Second.  If  such  a  disability  did  exist,  did  it  immxcdiately 
follow  the  injury,  that  is,  begin  with  the  date  of  the  accident? 
This  condition  connects  the  disability  with  the  bodily  injuries 
contemplated  by  the  insuring  clause,  which  injuries  must 
alone  produce  the  disability. 

Third.  If  such  disability  did  exist,  and  it  began  with  the 
date  of  the  accident,  was  it  continuous?  This  continuity  is 
necessary  so  as  to  exclude  complication  of  the  disability  by 


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subsequently  acquired  infirmities,  and  further  it  enables  both 
the  company  and  the  claimant  to  definitely  measure  the  extent 
of  liability. 

Claims  are  frequently  presented  for  weekly  indemnity 
in  cases  where  total  disability  did  not  commence  with  the  date 
of  the  accident,  and  the  most  frequent  argument  advanced 
for  their  recognition  is,  that  "I  didn't  think  the  injury  would 
amount  to  much,"  or,  ''I  tried  to  do  some  of  my  work  and  so 
save  the  company  money."  Both  of  these  arguments  miss 
the  mark.  While  there  are  exceptions,  yet  it  is  safe  to  assume 
as  a  general  proposition  that  all  bodily  injuries  become  very 
much  aggravated  by  continued  use  of  the  injured  member 
before  it  is  healed,  and  that  the  shortest  road  to  complete 
recovery  lies  through  absolute  rest  of  the  injured  part.  The 
insured  may  have  honestly  thought  that  he  was  saving  both 
the  company  and  himself  money  by  not  completely  giving  up  his 
work,  or  he  may  in  good  faith  have  been  deceived  by  the  apparent 
severity  of  his  injury.  What  he  has  actually  done  is  to  increase 
its  severity  by  his  voluntary  acts  due  to  his  mistaken  judgment. 
The  policy  does  not  insure  against  this,  nor  is  such  a  claim  pro- 
perly covered  by  the  policy. 

There  is  a  small  class  of  cases  which  fall  within  the  scope 
of  the  policy,  cases  in  which  the  injury  directly  produces  a 
condition  or  disease  complicating  and  prolonging  the  disability. 
These  are  the  infection  cases,  septicaemia  or  blood  poisoning. 
Frequently  the  wound,  which  becomes  the  seat  of  the  infection, 
is  comparatively  trivial,  and  would  of  itself  produce  no  disa- 
bility. In  these  cases,  some  appreciable  length  of  time,  one  to 
two  days,  frequently  elapses  before  the  infection  begins  to 
produce  symptoms  Ncausing  disability.  Where  there  is  a  clear 
history  of  injury  and  accidental  infection  occurring  thereby, 
such  cases  are  covered  by  the  policy. 

Indemnity  for  total  disability  is  paid  as  long  as  it  continues. 

PARTIAL  DISABILITY. 

Partial  disability  is  defined  by  the  policy  as  a  condition 
preventing  the  insured  from  performing  one  or  more  impor- 
tant daily  duties  pertaining  to  his  occupation.  The  conditions 
defining  liability  for  partial  disability  are  similar  to  the  total 
disability  provisions,  with  the  exception  that  the  partial  disa- 
bility may  begin  either  with  the  date  of  the  accident,  or  may 
immediately  follow  a  period  of  total  disability.  Payment  for 
partial  disability  is  at  the  rate  of  one-half  of  the  amount  pay- 
able for  total  disability  and  is  limited  to  a  period  of  twenty- 
six  weeks.  One  of  thepolicies  limits  it  to  52  weeks  and  provides 
for  different  degrees  of  partial  disability  grading  the  payments 
at  75%  and  50%  of  total  indemnity. 


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I  doubt  if  any  provision  of  the  policy  is  provocative  of  so 
much  controversy,  or  is  subject  to  such  grave  abuse  on  the 
part  of  the  insuring  pubHc.  Many  injuries  result  in  periods 
of  partial  disability  which  are  perfectly  just  claims  under  the 
policy,  but  in  a  large  number  of  cases,  claim  is  made  for  partial 
disability,  whereas  in  fact  the  claimant  has  at  most  been  only 
inconvenienced.  Investigation  and  adjustments  on  the  part 
of  the  company  are  most  difficult  and  frequently  impossible. 
The  percentage  of  partial  to  total  is  out  of  proportion  to  the 
loss  which  the  policyholder  suffers  in  the  average  case.  Some 
scale  defining  the  varying  degrees  of  partial  disability  and 
specifying  the  amount  of  indemnity  that  would  be  paid  in 
each  class  would  be  the  ideal  method  for  this  feature  of  the 
contract,  provided  some  practical  standard  of  determining 
the  disability  should  be  found. 

OPTIONAL  INDEMNITIES. 

Frequently  the  insured  prefers  to  make  an  immediate 
settlement  rather  than  wait  the  termination  of  his  disability. 
To  cover  such  cases,  the  policy  contains  a  schedule  of  "Optional 
Indemnities"  or  "Elective  Benefits,"  as  they  are  termed.  The 
amounts  payable  for  the  various  injuries  enumerated  in  this 
schedule  have  been  determined  by  taking  the  average  period 
of  disability  resulting  from  each  of  those  injuries.  The  sche- 
dule provides  a  fixed  sum  for  all  the  more  serious  forms  of 
injury  which  do  not  result  in  loss  of  members.  The  insured 
has  the  option  of  m.aking  settlement  for  this  sum,  or  of  receiv- 
ing the  weekly  indemnity  for  the  period  that  he  is  disabled. 
To  guard  against  an  adverse  selection  against  the  company, 
this  option  must  be  exercised  by  the  insured  within  twenty 
days  after  the  date  of  the  injury. 

SURGICAL,  HOSPITAL  BENEFITS 
AND  DOCTERS'  FEES. 

The  policy  also  contains  a  "Schedule  of  Operations." 
Should  the  injury  necessitate  one  of  these  operations,  the  insured 
is  entitled  to  the  amount  provided  for  the  same  in  addition  to 
such  other  indemnities  as  are  provided  in  the  policy. 

Should  the  injuries  necessitate  hospital  treatment  within 
ninety  days  from  the  date  of  the  accident,  the  insured  has  the 
option,  provided  no  claim  is  made  for  an  operation  fee,  of  being 
reimbursed  for  the  amount  actually  expended  for  hospital 
treatment  in  a  sum  not  exceeding  one-half  of  the  total  weekly 
indemnity  over  a  period  not  exceeding  ten  or  fifteen  weeks. 
(There  is  a  slight  difference  in  the  policy  provisions  on  this  point.) 

Should  the  injuries  not  result  in  any  loss  for  which  indem- 
nity is  payable  under  the  policy,  but  require  surgical  treatment, 


64 

the  company  will  pay  the  amount  expended  for  that  treatment 
not  exceeding  the  amount  of  one  week's  total  disability. 

DOUBLE  INDEMNITY. 

The  indemnities  payable  for  loss  of  life,  limb  or  sight,  or 
weekly  indemnity,  and  optional  indemnities  are  doubled  (one 
of  the  policies  increases  them  only  forty  per  cent.)  if  the  injuries 
are  sustained  in  certain  specified  ways.  The  phraseology  used 
in  these  policies  is  so  nearly  identical  that  T  shall  quote  only 
one   of   them:    'Tf   such    injuries,    causing    any    of    the   losses 

*  *  *  are  sustained  (a)  while  a  passenger  in  or  on  a  public 
conveyance  provided  by  a  common  carrier  for  passenger  service 
(including  the  platform,  steps  or  running  board  of  railway  or 
street  railway  cars) ;  or  (b)  while  a  passenger  in  a  passenger 
elevator  (excluding  elevators  in  mines);  or  are  caused  (c)  by 
the  burnirg  of  a  building  while  the  insured  is  therein;  or  (d) 
by  the  collapse  of  the  outer  walls  of  a  building  while  the  insured 
is  therein;  or  (e)  by  a  stroke  of  lightning;  or  (f)  by  a  cyclone 
or  a  tornado;  or  (g)  by  the  explosion  of  a  steam  boiler;  the 
company  will  pay  double  the  amounts  otherwise  payable     * 

*  *  ."  The  first  two,  public  conveyances  and  elevators, 
furnish  most  of  the  double  indemnity  claims.  This  language 
is  so  clear  that  it  requires  no  interpretation.  The  difficulty 
arises  in  applying  the  various  tests  to  the  facts  in  any  given 
claim.  Was  the  conveyance  provided  by  a  common  carrier 
for  passenger  service?  Was  the  Insured  a  passenger?  And  was 
he  in  or  on  the  conveyance?  If  any  one  of  these  conditions  is 
lacking,  no  liability  attaches  under  this  clause.  It  is  with  the 
difficulty  in  determining  whether  the  passenger  was  in  or  on 
the  conveyance  that  the  greatest  trouble  is  experienced,  but  a 
discussion  of  this  question  is  more  properly  taken  up  under  a 
discussion  of  accident  adjustments  or  claim  settlements  than 
in  analyzing  the  policy. 

Double  indemnity  was  first  introduced  in  the  policy  upon 
the  theory  that  the  insured  under  these  conditions  was  subject 
to  a  double  safe-guard;  not  only  was  he  individually  exer- 
cising due  care  in  avoiding  injury,  but  a  third  party,  to  wit, 
the  common  carrier  or  its  servants  were  likewise  exercising  due 
diligence  in  providing  for  his  safety.  In  practice  I  fear  the 
policy  has  sadly  departed  from  the  theory. 

ACCUMULATIONS. 

The  accumulative  clause  provides  for  a  yearly  increase 
in  the  principal  sum,  i.  e.,  the  amounts  payable  for  loss  of  life, 
limb  or  sight.  The  yearly  increase  is  five  or  ten  per  cent., 
depending  on  whether  the  policy  is  written  for  a  term  of  twelve 
months  or  for  some  shorter  term,  and  the  maximum  increase 


o5 

is  fifty  per  cent,  of  the  original  amount  for  which  the  poHcy 
was  issued.  This  clause  has  been  the  source  of  very  real  benefit 
to  the  policyholder,  the  companies  having  paid  out  large  sums 
under  it;  while  at  the  same  time  the  companies  have  received 
a  benefit  through  the  added  permanency  of  the  business. 

IDENTIFICATION. 

The  final  benefit  provision  of  the  policy  is  ''The  Identifi- 
cation Clause."     It  is  as  follows: 

"If  the  insured  by  reason  of  injury  or  illness  shall  be  physi- 
cally unable  to  communicate  with  his  relatives  or  friends,  the 
company,  upon  receipt  of  a  telegram  or  other  message  giving 
the  number  of  this  policy,  will  im.mediately  transmit  to  his 
relatives  or  friends  any  information  respecting  him,  and  defray 
all  expenses  necessary  to  put  the  insured  in  the  care  of  his 
relatives  or  friends,  provided  such  expense  shall  not  exceed 
the  sum  of  one  hundred  dollars." 

STANDARD  PROVISIONS. 

On  January  1st,  1914,  the  "Standard  Provision  Law" 
became  effective  in  several  of  the  states,  among  which  is  Connec- 
ticut. This  Act  provides  for  a  uniform  phraseology  of  twenty 
provisions  to  be  incorporated  in  every  Accident  Policy  issued 
after  that  date.  Several  of  these  provisions  are  optional  and 
are  omitted  by  the  companies  from  their  policies.  I  propose 
to  briefly  describe  and  analyze  these  provisions. 

1  provides  for  endorsements  and  riders,  classification  of 
risks  and  premium  rates  and  a  pro  rate  provision.  In  part 
it  reads  as  follows:"  *  *  *  jj^  ^j^g  event  that  the  insured 
is  injured  after  having  changed  his  occupation  to  one  classified 
by  the  company  as  more  hazardous  than  that  stated  in  the 
policy,  or  while  he  is  doing  any  act  or  thing  pertaining  to  any 
occupation  so  classified,  except  ordinary  duties  about  his  resi- 
dence, or  while  engaged  in  recreation,  *  *  *  ^^^  company 
will  pay  only  such  portion  of  the  indemnities  provided  in  the 
policy  as  the  premium  paid  would  have  purchased  at  the  rate 
but  within  the  limits  so  fixed  by  the  com.pany  for  such  more 
hazardous  occupation  *  *  *  ."  In  discussing  the  appli- 
cation, I  laid  som.e  stress  upon  the  description  in  full  of  the 
duties  which  the  applicant  perform. s.  This  controls  the  classifi- 
cation of  the  risk  and  the  premium.  A  claimant  must  furnish 
as  part  of  his  proofs  of  loss  a  statement  describing  the  manner 
in  which  the  injury  occurred.  If  it  appears  from  this  state- 
ment, or  from  the  investigation  which  the  company  may  make, 
that  the  insured  has  changed  his  occupation  to  one  more  hazard- 
ous, or  if  he  was  doing  any  act  or  thing  pertaining  to  a  more 
hazardous  occupation,  he  can  recover  only  some  percentage 
of  the  amount  written  in  his  policy. 


56 

2  excludes  any  statements  made  at  the  time  the  poHcy  is 
issued  unless  they  are  made  in  writing  and  endorsed  on  and  made 
part  of  the  policy.  It  furthermore  prohibits  changes  in  the 
policy  except  over  the  signature  of  an  executive  officer. 

3  provides  for  the  reinstatement  of  the  policy  by  the  accept- 
ance of  an  overdue  premium.  This  provision  in  its  appli- 
cation concerns  the  industrial  rather  than  the  commercial 
branch  of  the  accident  business. 

4  and  5  place  upon  the  insured  or  beneficiary  the  duty  of 
notifying  the  company  within  twenty  days  of  the  date  of  the 
accident  causing  the  injury.  The  notice  may  be  given  to  the 
company  or  to  an  authorized  agent.  If  the  notice  is  not  given 
within  twenty  days,  it  is  incumbent  upon  the  claimant  to  show 
that  it  was  not  reasonably  possible  to  give  the  notice  within 
that  time. 

6  provides  that  the  company  shall  furnish  forms  on  which 
proof  of  loss  may  be  presented  within  fifteen  days  after  receipt 
of  notice. 

7  fixes  a  limit  of  ninety  days  after  the  date  of  the  loss  or 
termination  of  disability  for  filing  proofs. 

8  gives  the  company  the  right  to  a  medical  examination 
of  the  claimant  or  to  an  autopsy  in  the  event  of  his  death. 

9  provides  that  payments  will  be  made  immediately  upon 
receipt  of  proofs. 

10  provides  that  payments  on  account  of  extended  claim_s 
for  weekly  indemnity  shall  be  made  every  eight  weeks. 

11  provides  for  the  paymicnt  of  indemnity  for  loss  of  life 
to  the  beneficiary  or  the  estate  of  the  insured,  and  for  the  pay- 
ment of  all  other  indemnities  to  the  insured. 

12  gives  the  insured  the  right  to  cancel  the  policy  and 
receive  the  unearned  premium  if  he  changes  his  occupation 
to  one  less  hazardous  than  that  at  which  the  policy  was  issued. 
It  is  a  corollary  to  the  pro  rate  clause  in  Provision.  1. 

13  gives  the  insured  the  right  to  change  the  policy  with- 
out the  consent  of  the  beneficiary. 

14  fixes  a  limit  of  sixty  days  after  filing  proof  of  loss  before 
suit  can  be  begun  and  limits  the  time  within  which  suit  may 
be  begun  to  two  years. 

15  provides  for  the  substitution  of  special  statutes  in  any 
state  which  extends  the  time  limit  of  the  various  limitations 
in  the  policy. 

16  gives  the  company  the  right  to  cancel  the  policy  at 
any  time  by  written  notice  to  the  insured  together  with  its 
check  for  the  unearned  portion  of  the  premium.  No  reason 
for  the  company's  action  is  necessary,  nor  need  the  notice  be 
delivered  to  the  insured;  it  is  sufficient  if  it  be  mailed  to  his 
last  address  as  shown  by  the  records  of  the  company.  Any 
cancellation  so  made  does  not  affect  any  claim  originating 
prior  thereto. 


57 

17  is  optional  and  is  omitted  in  several  of  the  policies  we 
have  -  been  discussing.  It  provides  for  certain  reductions  in 
benefits  in  the  event  that  the  policyholder  carries  other  insurance 
covering  the  same  loss  without  giving  the  company  notice 
thereof. 

ADDITIONAL  PROVISIONS. 

This  Act  also  permits  the  policy  to  contain  "Additional 
Provisions"  which  do  not  conflict  with  the  Act  and  the  stand- 
ard policy  provides  for  assignment  of  policy;  it  excludes 
injuries  while  participating  in  aeronautics;  and  some  addi- 
tional special  provisions  pertaining  to  the  particular  company's 
business  issuing  the  policy.  The  contract  closes  with  the 
signature  of  the  executive  officers  and  countersignature  of  the 
authorized  agent  issuing  this  policy. 

This  form,  which  I  have  styled  the  "standard  policy," 
contains  all  the  various  features  of  Accident  insurance.  Each 
company  issues  a  variety  of  modifications  of  it,  as  for  instance, 
policies  covering  loss  of  life,  limb  or  sight,  loss  of  life  only, 
weekly  indemnity  only,  policies  providing  for  accum.ulations 
of  weekly  indemnity,  policies  providing  for  fully  accumulated 
principal  sum  payments,  policies  limiting  the  manner  in  which 
the  injuries  must  be  sustained.  The  variations  in  the  premium 
are  as  manifold  as  the  policy  forms,  which  are  too  numerous 
to  take  up  in  detail  at  this  meeting,  and  would  in  the  main  be 
a  repetition  of  what  has  been  said  in  analyzing  the  "standard 
policy." 


The  Insuring  Olause   oi  Acci- 
dent   Policies 

BY 

M.  P.  CORNELIUS 

Tke  Continental  Casualty  Com{)any 


FEBRUARY  10.  1915 


Perhaps  no  single  proposition  of  insurance  law  is  so  gener- 
ally misunderstood  as  that  applicable  to  the  proper  inter- 
pretation of  the  insuring  clause  of  personal  accident  policies. 
The  obvious  explanation  is  that  this  insuring  clause  gives  only 
a  limited  coverage.  The  full  coverage  is  given  by  the  instiring 
clause  of  a  life  insurance  policy,  and  in  drawing  the  insuring 
clause  of  so-called  personal  accident  policies  the  companies 
have  endeavored  in  a  few  words  to  limit  liability  to  only  a  frac- 
tion of  the  coverage  given  under  the  life  policy.  In  the  very 
nature  of  things,  therefore,  hundreds  of  border  line  cases  have 
arisen.  In  such  cases  it  is  necessary,  in  order  to  arrive  at  a 
correct  conclusion,  to  have  thoroughly  in  mind  the  principles 
of  construction  applicable,  and  to  reason  very  closely  in  applying 
them. 

Modern  policies  of  accident  insurance  did  not,  like  Minerva, 
spring  full-fledged  from  the  brain  of  some  ancient  insurance 
Jove,  but  are  the  product  of  a  slow  evolution.  This  form  of 
insurance,  as  originally  conceived  in  England,  was  much  more 
restricted  in  scope  than  at  present,  and,  in  fact,  only  covered 
railroad  accidents.  The  original  restrictions  have  gradually 
been  enlarged,  and  the  multitude  of  conditions  precedent  to 
liability  have  from  time  to  time  fallen  away,  until  now  the 
companies  have  assumed  liability  for  death  occasioned  solely 
by  what  may  be  roughly  termed  an  unexpected  bodily  injury 
brought  about  by  the  happening  of  an  accident. 

When  one  considers  the  question  dispassionately  it  may 
be  said  that  from  one  viewpoint  there  is  in  reality  no  justifi- 
cation or  real  occasion  for  the  existence  of  a  form  of  insurance 
covering  only  death  occasioned  in  the  manner  just  described. 
This  is  but  one  of  the  many  ways  in  which  human  life  is  termi- 
nated, and  only  a  comparatively  small  fraction  of  deaths  are 
so  occasioned.  It  would,  therefore,  be  just  as  logical  for  one 
to  take  out  a  policy  insuring  against  death  from  Tuberculosis 
only,  or  from  any  one  of  the  many  principal  agencies  which 


59 

terminate  human  life.  In  reality  life  insurance  is  the  only 
adequate  and  sensible  coverage  of  this  casualty.  There  is  no 
reason  why  a  man  should  select  one  of  the  causes  which  are 
likely  to  terminate  his  life,  and  insure  against  death  by  such 
means  to  the  exclusion  of  all  others.  These  remarks  are,  of 
course,  not  applicable  to  insurance  against  loss  of  limbs,  sight 
or  time. 

In  this  connection  another  question  presents  itself,  — 
nam.ely,  is  there  any  real  justification  for  an  arbitrary  line  of 
demarcation  between  insurance  against  loss  of  time  from  so- 
called  accidents  and  that  against  loss  of  time  from  so-called 
diseases.  In  many  instances  it  is  difficult  to  distinguish  between 
the  two.  This  proposition  is  readily  recognizable  by  any  one 
who  has  ever  attempted  to  formulate  a  definition  of  injury 
which  would  exclude  all  diseases,  or  a  definition  of  disease  which 
would  exclude  all  injuries.  Difficulties  arising  in  this  connec- 
tion will,  in  the  future,  become  more  numerous  in  this  country 
with  the  development  of  the  principles  applicable  to  the  construc- 
tion of  the  Workmen's  Compensation  laws.  The  decisions  in 
which  the  courts  have  attempted  to  distinguish  between  occu- 
pational injuries  and  diseases  are  already  in  hopeless  conflict. 
It  may  well  be  that  in  the  not  far  distant  future  the  distinction 
between  time  accident  and  time  sickness  insurance  will  be 
abolished,  and  one  contract  covering  loss  of  earning  capacity 
from  any  cause  will  be  issued  in  their  stead. 

I  find  that  I  am  digressing.  The  thought  just  suggested, 
however,  is  not  entirely  foreign  to  the  subject  matter  of  this 
address  and  will,  I  think,  provide  grounds  for  interesting  and 
instructive  speculation.  Let  me  make  it  clear  at  this  point 
that  in  my  subsequent  remarks  I  intend  to  confine  myself  solely 
to  the  clause  of  personal  accident  policies  insuring  against  death. 

As  already  intimated,  this  insuring  clause  was  not  primarily 
evolved  by  the  application  of  principles  of  logic  and  sound  reason- 
ing after  thorough  consideration  of  all  the  pertinent  factors, 
including  etymological  distinctions.  On  the  contrary,  I  imagine 
that  in  its  primitive  form  it  was  conceived  by  some  wide  awake, 
progressive  agency  man  who  had  no  clearly  defined  idea  of  the 
precise  coverage  given,  and  had  not  the  ability  or  desire  to  con- 
sider those  subtilities  of  construction  necessarily  arising  in 
connection  with  an  attempt  to  cover  a  part  of  a  logical  whole. 

Be  that  as  it  may,  the  draughtsmen  of  the  first  policies 
of  accident  insurance  did  not  appreciate  the  complexity  and 
infinite  variety  of  the  hazard  they  proposed  to  insure  against, 
and  did  not  realize  what  an  exceedingly  comprehensive  liability 
they  assumed.  Some  of  these  policies  broadly  insured  against 
death  resulting  in  consequence  of  accident.  Now,  an  "accident" 
has  been  generally  defined  by  the  lexicographers  and  the  courts 
to  be  "an  event  that  takes  place  without  one's  foresight  or 
expectation;     an   undesigned,    sudden    and   unexpected    event; 


60 

chance;  contingency."  It  will  at  once  be  seen  that  a  death 
resulting  from  any  unexpected,  fortuitous  cause  is  a  death  from 
accident.  Therefore  most  deaths  occasioned  by  disease  are 
accidental  deaths. 

The  companies  soon  began  to  realize  this  proposition,  and 
to  understand  that  the  coverage  given  by  a  policy  insuring 
against  accidental  death  or  death  from  accident  was  much  more 
comprehensive  than  they  had  intended.  It  therefore  became 
necessary  to  devise  some  modification  of  the  insuring  clause. 
As  a  consequence  the  companies  with  considerable  uniformity 
adopted  a  .  clause  substantially  to  the  effect  that  they  would 
pay  for  death  occasioned  solely  and  independently  of  all  other 
causes  by  a  personal  bodily  injury  effected  through  external, 
violent  and  purely  accidental  means.  There  have  been,  and 
are  now,  many  more  or  less  material  alterations  of  the  clause 
just  given,  but  it  has  been  used  substantially  as  stated  in  prac- 
tically all  policies  of  accident  insurance  for  some  fifty  years. 

It  is  with  the  proper  interpretation  of  this  clause  that  we 
are  now  concerned.  I  wish  first  to  emphasize  its  double  char- 
acter. Two  distinct  propositions  must  be  established  in  order 
to  show  liability  under  it.  First,  it  must  be  shown  that  the 
insured  received  a  personal  bodily  injury  effected  by  external, 
violent  and  purely  accidental  means.  Second,  it  must  be  estab- 
lished that  an  injury  so  received  was  the  sole  cause  of  death 
independent  of  any  other  cause.  Many  of  the  difficulties  and 
misunderstandings  which  have  arisen  in  connection  with  the 
interpretation  of  the  clause  have  been  occasioned  by  reason 
of  the  failure  to  grasp  this  distinction,  and  the  further  inability 
to  understand  what  is  meant  by  an  injury  effected  by  external, 
violent  and  accidental  means. 

Because  of  the  construction  which  the  courts  have  put 
upon  the  adjectives  ''external"  and  "violent,"  they  are  of  little 
importance  in  determining  liability  in  any  given  case.  For 
instance,  it  has  been  held  that  gas  and  water  inhaled  into  the 
lungs  and  causing  death  are  external  and  violent  means.  Again, 
it  has  been  held  that  the  necessary  element  of  external  and  vio- 
lent means  is  present  where  the  insured  has  taken  poison  inter- 
nally; come  in  contact  with  poisonous  substances;  choked  on 
a  piece  of  meat;  swallowed  a  fish  bone;  eaten  unsound  oysters; 
succombed  to  nervous  shock  consequent  upon  fright,  etc.,  etc. 
In  fact,  it  may  be  safely  said  that  it  is  practically  impossible 
to  conceive  of  a  case  where  under  the  law  as  it  has  been  estab- 
lished, a  company  would  be  relieved  of  HabiHty  by  reason  of 
the  presence  in  the  insuring  clause  of  the  adjectives  "external" 
and  "violent,"  providing  the  necessary  element  of  accident 
in  the  means  bringing  about  the  injury  was  present,  I  therefore 
conclude  that  an  insuring  clause  containing  these  words  is 
redundant  and  of  practically  the  same  legal  effect  as  if  they 
were  omitted  and  only  the  adjective  "accidental"  included. 


61 

When,  therefore,  may  it  be  said  that  an  injury  is  effected 
by  accidental  means?  The  answer  is  that  whenever  an  injury 
is  brought  about  by  reason  of  the  happening  of  an  accidental 
event  —  the  occurance  of  a  fortuitous  circumstance  —  that 
injury  is  effected  by  accidental  means.  I  wish  to  em^phasize, 
however,  that  the  mere  fact  of  the  occurrence  of  an  injury 
does  not  carry  with  it  the  conclusion  that  such  injury  was 
effected  by  accidental  means.  Many  injuries  are  accidental 
which  are  not  effected  by  accidental  means.  We  must  at  all 
times  bear  in  mind  the  distinction  between  the  means  and  the 
result.  Both  must  be  accidental.  There  must  be  an  accidental 
injurv  brought  about  bv  the  happemng  of  an  accident.  Per- 
haps I  can  m.ake  this  proposition  clear  by  giving  a  few  illustra- 
tions.  In  one  of  the  early  cases  bearing  upon  the  question  now 
under  discussion,  it  appeared  that  the  insured  was  swinging 
Indian  clubs,  and,  as  a  consequence,  ruptured  a  blood  vessel. 
This  injury  was,  of  course,  accidental.  The  court  said  that 
to  ascertain  whether  it  was  effected  by  accidental  means  it 
was  necessary  to  determine  whether  the  insured  did  something 
that  he  did  not  intend  to  do;  in  other  words,  whether  there 
was  an  element  of  accident  in  the  means  bringing  about  the 
unfortunate  result.  The  court  pointed  out  that  if  the  clubs 
slipped  in  the  insured's  hands  or  struck  the  chandelier  or  some- 
thing of  that  sort,  then  the  necessary  element  of  accidental 
means  would  be  present;  but  if  the  insured  accomplished  his 
exercise  in  precisely  the  way  intended,  without  the  intervention 
of  a  fortuitous  circumstance,  the  injury  could  not  be  considered 
as  effected  by  accidental  means. 

In  a  case  recently  decided  it  appeared  that  the  insured 
was  sitting  in  an  arm  chair,  and  for  the  purpose  of  demonstrating 
his  strength  placed  his  hands  on  the  arms  of  the  chair  and  raised 
and  lowered  his  body.  This  unaccustomed  exercise  brought 
about  the  rupture  of  a  blood  vessel.  The  court  concluded  that 
although  the  injury  was  clearly  accidental  it  was  not  effected 
by  accidental  means,  because  the  insured  did  what  he  intended 
to  do  in  the  way  designed,  and  the  only  unexpected  occurrence 
in  connection  with  the  incident  was  the  unfortunate  result. 

These  illustrations  of  the  manner  in  which  the  courts  have 
applied  the  principles  above  outlined  to  concrete  cases  in  deter- 
mining whether  the  means  were  accidental,  might  be  multi- 
plied. We  believe  the  foregoing  are  sufficient  to  illustrate  the 
principle.  These  illustrations  are,  of  course,  very  plain  cases. 
Border  lines  cases  arise  which  are  not  so  easy  to  solve.  We 
believe,  however,  that  in  all  of  these  cases  the  correct  determina- 
tion of  liability  may  be  arrived  at  by  applying  the  principle 
which  we  have  just  discussed.  It  may  be  safely  said  that  in  all 
cases  where  the  insured  does  just  what  he  intends  to  do  in  the 
manner  intended,  there  is  no  liability  no  matter  how  unexpected 
and  serious  is  the  result  brought  about  by  such  means. 


62 

Having  once  determined  that  the  insured  has  received  a 
bodily  injury,  and  that  same  was  effected  by  accidental  means, 
it  becomes  necessary  to  inquire  further  whether  such  injury 
may  be  properly  considered  as  the  sole  cause  of  death.  The 
rules  of  law  formulated  by  the  courts  which  have  had  occasion 
to  consider  this  question  will  now  be  briefly  outlined.  It  has 
been  definitely  established  that  if  an  injury  effected  by  acci- 
dental means  brings  about  a  bodily  disorder  of  the  character 
usually  termed  a  disease,  which  in  turn  causes  death,  the 
company  is  liable.  If  a  man  accidentally  cuts  his  finger  and 
the  disease  of  septecimia  follows,  there  is  liability.  The  injury  is 
always  regarded  as  the  sole  cause  of  death  when  it  may  properly 
be  said  to  be  the  sole  original  cause  of  any  connected  chain 
of  events  bringing  about  death.  The  mere  fact  that  the  final 
link  in  the  chain  of  circumstances  following  the  injury  happens 
to  be  a  disorder  which  would  commonly  be  considered  as  a 
disease,  does  not  relieve  the  company  of  liability.  Failure  to 
appreciate  this  proposition  has  given  rise  to  much  misunder- 
standing. The  claim  representatives  of  the  companies  have 
sometimes  honestly  adopted  the  mistaken  position  that  because 
an  insured  dies  of  pneumonia,  there  is  no  liability  even  though 
it  be  shown  that  the  pneumonia  was  brought  about  by  a  severe 
blow  upon  the  chest. 

On  the  other  hand,  an  injury  cannot  be  considered  to  be 
the  sole  cause  of  death  independent  of  other  causes  if  any  disease, 
bodily  infirmity  or  abnormality  existing  at  the  time  the  injury 
is  received,  co-operates  with  the  injury  as  one  of  the  causes  of 
death.  Thus,  if  a  man  suffering  from  diseased  arteries  receives 
an  injury  which  would  not  be  sufficient  to  cause  serious  con- 
sequences to  a  normal  individual,  and,  as  a  result  of  the  two 
factors  injury  and  pre-existing  disease  dies,  there  is  no  liability. 
In  a  recent  case  it  appeared  that  the  insured  died  apparently 
as  a  consequence  of  a  piece  of  meat  lodging  in  his  windpipe. 
An  autopsy  disclosed  that  there  was  an  old  abscess  in  his  throat 
which  was  ruptured  as  a  consequence  of  the  violent  coughing 
by  which  nature  endeavored  to  dislodge  the  foreign  substance. 
The  medical  testimony  showed  that  the  rupturing  of  the  abscess 
was  at  least  one  of  the  active  factors  in  causing  death.  The 
court,  therefore,  concluded  that  the  injury  could  not  be  con- 
sidered as  the  sole  cause.  In  another  case  it  appeared  that 
the  insured  received  an  injury  to  his  eye.  The  evidence  disclosed 
that  at  the  time  of  the  injury  there  was  a  cataract  on  the  eye. 
The  court  held  that  even  though  the  injury  was  one  of  the  causes 
of  loss  of  sight,  the  company  was  not  liable  if  the  abnormality 
existing  at  the  time  the  injury  was  received  was  one  of  the 
factors  in  bringing  about  blindness. 

A  som^ewhat  difficult  question  arises  when  it  appears  that 
an  insured  prior  to  receiving  an  injury  has  suffered  from  some 
disease  from  which  he  has  apparently  entirely  recovered,  but 


G3 

the  injury  brings  about  a  recurrence.  In  this  class  of  cases 
the  majority  of  the  courts  have  held  that  there  is  a  liability 
even  though  it  be  proved  that  the  injury  caused  a  recurrence 
of  an  old  trouble,  if  it  may  properly  be  said  that  there  had 
been  a  complete  recovery  from  the  former  disease,  but  that 
disease  had  left  a  latent  susceptibility  to  recurrence.  It  must, 
therefore,  be  conceded  that  under  the  weight  of  authority  there 
is  liability  even  though  the  injury  causes  the  recurrence  of 
a  former  trouble,  if  the  evidence  justifies  the  conclusion  that 
the  injury  is  the  sole  cause  of  rendering  active  and  virulent 
a  mere  dormant  susceptibility  or  constitutional  tendency.  A 
case  of  this  sort  involves  the  determination  of  an  exceedingly 
difficult  fact  question.  It  must  be  recognized  that  there  are 
some  troubles  which  may  be  fairly  said  to  have  entirely  dis- 
appeared, and  which  under  ordinary  circumstances  would  never 
recur.  When  an  injury  is  of  such  character  as  to  actually  alter 
the  natural  course  of  things,  and  arouse  a  trouble  entirely  latent 
and  of  such  a  character  as  would  properly  be  described  as  a  mere 
predilection,  a  company  ought  to  pay.  Unfortunately,  this 
proposition  of  law  is  so  difficult  to  apply  fairly  in  a  concrete 
case  that  an  injustice  is  likely  to  be  done  the  company. 

It  must  also  be  remembered  that  even  though  an  insured 
at  the  time  of  receiving  an  injury  is  suffering  from  a  disease, 
the  company  is  liable  if  the  injury  is  sufficiently  severe  to 
cause  death  entirely  independent  of  the  disease.  An  extreme 
illustration  of  this  kind  of  a  case  is  presented  when  a  man  suffer- 
ing from  a  serious  disease  is  struck  by  lightning  or  killed  b}^ 
a  bullet  through  the  heart.  In  either  of  these  cases  there  would 
be  liability  no  matter  how  serious  the  character  of  the  disease 
with  which  the  insured  was  afflicted.  There  is  no  difficulty 
in  determining  a  case  so  plain  as  that  made  by  the  foregoing 
illustration.  In  most  cases,  however,  when  a  claimant  relies 
upon  this  doctrine  a  very  difficult  fact  question  is  presented. 

We  have  said  enough  to  indicate  the  difficulties  which 
confront  those  who  are  honestly  endeavoring  to  determine 
the  liability  of  their  companies  under  policies  of  personal  acci- 
dent insurance.  The  dangers  inherent  in  any  attempt  to  formu- 
late general  definitions  or  rules  designed  to  cover  a  multitude 
of  contingencies,  are  very  forcibly  brought  home  to  any  one  who 
has  had  occasion  to  endeavor  to  reconcile  the  decisions  of  the 
courts  construing  this  insuring  clause.  As  we  have  heretofore 
intimated,  the  proper  solution  of  the  various  questions  arising 
in  connection  with  the  construction  of  this  clatise  necessitates 
in  many  instances  very  close  and  subtile  reasoning.  It  has 
sometimes  happened  that  the  companies  themselves  in  defend- 
ing claims  under  these  policies  have  had  in  mind  no  very  well 
defined  principle  which  might  be  applied  in  all  cases.  It  is 
certain  that  many  courts  who  have  had  occasion  to  pass  upon 
these  cases  have  not  had  properly  presented  to  them  the  con- 


64 

ceptions  of  law  and  logic  which  must  be  applied  if  we  are  to 
have  any  uniform  rule  calculated  to  do  approximate  justice 
in  all  cases.  In  consequence  there  has  been  a  good  deal  of 
aimless  floundering  about  both  on  the  part  of  the  companies 
and  the  courts. 

It  is  therefore,  exceedingly  important  that  all  the  com- 
panies should  have  a  uniform  understanding  of  the  principle 
applicable  to  the  construction  of  their  contracts,  and  should 
at  all  times  and  in  all  places  consistently  uphold  this  principle. 

We  believe  that  uniformity  of  action  among  the  companies 
in  this  particular  will,  in  some  considerable  measure,  eliminate 
the  constantly  increasing  difficulties  with  which  the  claim  and 
legal  departments  of  the  accident  companies  find  themselves 
confronted  in  their  effort  to  perform  their  appointed  functions 
in  such  a  manner  as  to  do  justice  to  their  employers  and  the 
insured.  The  principles  which  I  have  rather  inadequately 
expressed  in  this  paper  are,  I  think,  in  line  with  the  greater 
weight  of  authority.  You,  of  course,  understand  that  in  a 
number  of  decisions  these  principles  have  been  disapproved. 
I  realize  that  there  is  nothing  new  in  the  foregoing  presentation 
of  legal  principles,  and  that  most  of  you  are  entirely  conversant 
with  these  doctrines.  Unfortunately,  however,  a  surprisingly 
large  number  of  representatives  of  the  companies  have  no  ade- 
quate appreciation  of  these  principles,  and  I  think  I  am  not 
stretching  the  facts  when  I  say  that  this  circumstance  has 
had  a  good  deal  to  do  with  bringing  about  the  unfortunate 
conflict  and  misunderstanding  relative  to  this  subject.  The  law 
applicable  is  still,  in  a  measure,  in  a  formative  state,  and  we 
all  have  a  present  opportunity  to  have  something  to  do  in  bring- 
ing about  uniformity  and  stability.  It  seems  to  me  that  those 
of  us  who  are  connected  with  the  claim  and  legal  departments 
of  the  several  companies  could  flnd  no  more  beneficial  activity 
than  to  seize  upon  every  opportunity  to  promulgate  sound 
doctrine,  not  only  in  the  presentation  of  our  cases  before  the 
courts  but  also  in  our  daily  association  with  the  general  public, 
our  agents  and  policyholders. 


The  Relation  oi  tne  JVledical  Examiner 
to  Casualty  Insurance 


E.  A.  WELLS.  M.  D. 

JE/tna  Life  Insurance  Comfjany 


FEBRUARY  10.  1915 


About  a  year  ago  I  read  before  this  body  a  paper  on  the 
"Relation  of  the  Medical  Examiner  to  the  Ltfe  Insurance 
Business."  To-day  I  shall  take  up  his  relation  to  the  various 
forms  of  personal  casualty  insurance.  For  the  most  part,  the 
same  physicians  make  investigations  for  the  casualty  depart- 
ments that  make  the  life  examinations.  Yet  it  is  far  from  a 
general  truth  that  the  doctor  who  does  satisfactory  work  for 
the  one  department  will  necessarily  do  good  work  for  the  other. 
The  chief  reason  for  this  is  that  the  average  life  examiner  is 
only  rarely  asked  to  make  an  investigation  for  a  casualty  depart- 
ment. Futherm.ore  the  contract  of  life  insurance  is  relatively 
simple  whereas  the  contracts  of  insurance  under  accident, 
health,  limited  health,  liability,  compensation  and  other  personal 
casualty  policies  are  not  popularly  well  understood  and  the  average 
life  examiner  has  never  seriously  attempted  to  miaster  these. 
As  a  consequence  many  reports  made  by  the  doctors  in  the  field 
are  quite  inadequate  and  m.uch  time  is  lost  by  having  to  write 
for  further  details.  It  not  infrequently  happens  that  the  Home 
Office  has  to  write  several  tim.es  and  even  carefully  explain  the 
contract  of  insurance  before  the  physician  will  send  in  the  facts 
that  are  most  pertinent  to  the  case  in  hand. 

Much  of  the  bad  feeling  that  is  so  frequently  stirred  up 
against  the  casualty  insurance  company  is  due  to  the  fact  that 
the  insured  and  the  insured's  physician  and  sometimes  even 
the  company's  physician  insist  that  the  contract  of  insurance 
should  be  interpreted  according  to  their  preconceived  notion 
of  what  that  contract  is  rather  than  in  accordance  with  the 
very  explicit  wording  of  the  policy  itself.  Very  often  the  foun- 
dation for  this  misunderstanding  was  laid  by  a  none  too  careful 
agent  who,  in  selling  a  policy,  allows  the  insured  to  carry  away 
an  impression  that  he  is  insured  against  contingencies  that 
distinctly  are  not  covered.  The  temptation  for  an  agent  to  take 
the  part  of  the  insured  against  the  company  is  so  strong  that 
he  will  sometimes,  as  it  were,  hypnotize  himself  into  a  state  of 


66 

apparent  ignorance  that  is  astounding.  A  certain  insured 
recently  presented  a  claim.  He  had  a  cheap  form  of  health 
policy  that  paid  only  for  a  certain  number  of  distinctly  specified 
diseases.  The  claim  was  for  a  disease  clearly  not  covered  by 
his  policy.  The  company  denied  the  claim.  The  agent  in 
writing  in  about  it  said,  "This  man  has  paid  us  his  money  for 
just  such  contingencies."  Now  that  is  just  what  this  man  had 
not  paid  for.  He  had  paid  a  low  premium  and  had  only  protected 
himself  in  part.  He  was  unwilling  to  pay  the  money  necessary 
to  protect  himself  against  all  contingencies,  and  it  may  generally 
be  said  of  insurance  policies,  as  of  other  commodities,  that  one 
gets  only  what  one  pays  for.  One  cannot  escape  the  conviction" 
that  if  this  agent  could  talk  in  this  way  after  the  claim  was 
made,  he  may  have  allowed  the  insured  to  buy  that  policy  and 
go  away  with  the  impression  that  he  was  insured  against  all 
manner  of  illness.  At  least  he  may  have  been  told  that  he  had 
a  health  policy,  —  And  what  insured  ever  reads  his  policy? 

It  should  be  stated  here  that  the  average  insurance  com- 
pany, for  its  own  good,  if  for  no  other  reason,  fully  intends  to- 
interpret  its  policy  contracts  liberally.  It  is  willing,  and  in 
practice  does,  give  the  assured  the  benefit  of  the  doubt,  if  two 
interpretations  of  a  contract  are  possible.  But  men  will  buy 
a  partial  line  of  insurance  and  then  when  disaster  comes  seek 
to  make  that  partial  line  cover  the  existing  catastrophe. 

You  may  say,  "What  has  this  to  do  with  the  medical 
examiner?  Why  not  employ  lay  adjusters  to  do  all  the  talking 
about  contracts  and  leave  to  the  medical  man  simply  the  state- 
ment of  the  insured's  physical  condition?"  This  is  done  to  a 
large  extent  by  force  of  circumstances  as  suggested  above, 
but  if  the  medical  man,  who  has  better  access  to  the  patients, 
their  physicians,  the  hospitals,  etc.,  can,  by  a  little  study,  a 
little  thought  and  some  experience,  incorporate  in  his  report 
the  cardinal  necessities  of  the  case  he  immediately  doubles 
his  value  as  an  examiner. 

What  are  these  cardinal  points  to  be  held  in  mind  in  making 
an  examination  for  the  various  forms  of  personal  casualty 
insurance  ? 

If  the  claim  be  under  an  accident  policy  the  principal 
points  to  be  ascertained  are  as  follow^s:  First,  was  there  an 
accident?  This  may  seem  trivial  but  as  a  matter  of  fact  this 
question  is  fundamental  in  the  accident  insurance  business. 
The  policy  contract  pays  "for  disability  or  death  resulting 
directly  and  independently  of  all  other  causes,  from  bodily 
injuries  effected  solely  through  external,  violent  and  accidental 
means."  If  a  man  attempts  to  lift  a  weight  that  is  too  heavy 
for  him  and  strains  his  back  it  is  an  accident  from  his  point  of 
view,  but  it  is  not  an  accident  as  defined  by  the  policy  and  the 
Home  Office  will  very  properly  deny  the  claim.  If,  however, 
in  attempting  to  lift  a  heavy  object  the  man's  foot  slips,  because 


67 


of  which,  he  strains  his  back,  an  accident  has  been  sustained 
in  accordance  with  the  intent  of  the  policy  and  the  claim  will 
be  allowed. 

Frequently  the  holder  of  an  accident  policy  becomes  ill 
of  a  disease  which,  by  reason  of  its  nature,  he  believes  must  have 
been  due  to  accidental  injury  and  so  he  makes  claim  acknowl- 
edging that  he  has  no  knowledge  of  any  accident.  In  such  case, 
the  claim  will  not  be  paid  unless  the  Home  Office  is  persuaded 
that  the  man  is  right  in  his  contention.  A  man  might  wake 
up  from  a  deep  sleep  to  find  that  he  had  been  burned  by  some 
chemical  that  had  accidentally  been  spilled  on  him.  He  might 
not  be  able  to  find  out  what  the  chemical  was  nor  how  it  was 
spilled  on  him,  yet  this  would  be  acknowledged  as  an  accident. 
Frequently,  claim  is  made  for  various  forms  of  infection  and  we 
are  asked  to  pay  under  an  accident  policy  on  the  ground  that 
the  infection  could  not  have  taken  place  unless  there  had  been 
an  accident.  These  claims  are  not  paid  unless  an  accident  can 
be  definitely  described,  for  there  are  plenty  of  infections  that 
can  take  place  with  no  injury  to  the  coverings  of  the  body, 
other  than  a  theoretical  injury.  For  instance,  facial  erysipelas 
or  other  forms  of  erysipelas.  Infections  of  the  nose  and  throat, 
as  the  ordinary  cold,  or  tonsilitis  or  scarlet  fever.  Infections  of 
the  genitals  as  gonorrhoea  or  syphilis.  Infections  of  the  joints 
as  in  the  various  forms  of  arthritis  or  acute  rheumatic  fever. 

If  a  man  gets  an  infection  on  the  foot  from  a  tight  shoe, 
it  is  an  accident  if  it  were  a  new  shoe,  and  he  puts  it  on  being 
unfamiliar  with  it.  But  if  it  be  an  old  pair  of  shoes  that  he 
has  had  reason  to  know  are  uncomfortable,  it  is  no  accident  if, 
with  reasonable  knowledge  or  opportunity  for  such  knowledge, 
the  shoe  causes  an  abrasion  that  becomes  infected. 

By  infection  we  mean  the  invasion  of  the  body  by  a  parasite 
(usually  a  bacterium)  from  the  outside  world.  Ordinarily  we 
assume  that  there  must  be  some,  at  least  microscopical,  injury 
to  the  integument  before  such  an  invasion  can  take  place. 
But  these  theoretical  injuries  to  the  coverings  of  the  body  are 
not  accidents  within  the  intent  of  the  policy  contract. 

The  point  where  the  bacteria  get  into  the  body  is  called 
in  technical  language  *'the  portal  of  entry."  If  this  portal  of 
entry  is  made  at  the  time  of  the  injury,  as  in  a  lacerated  wound, 
and  infection  follows,  it  is  usually  assumed  that  the  infection 
entered  the  body  at  the  time  of  the  accident  and  that  all  the 
results  of  this  infection  come  under  the  provisions  of  an  accident 
policy.  But  when  no  portal  of  entry  is  made  at  the  time  of  the 
injury  and  the  skin  is  not  broken,  it  becomes  a  serious  question 
whether  a  following  infection  should  be  assumed  to  be  due  to 
the  injury  alleged. 

For  instance,  a  common  claim  is  as  follows:  A  man  sustains 
a  slight  strain  of  the  leg.  He  thinks  very  little  of  it.  A  few 
days   later  the  leg  becomes   swollen,  tender  and  painful.     He 


68 

develops  an  infectious  process  along  the  course  of  and  in  the 
walls  of  one  of  the  veins  of  his  leg,  a  so-called  phlebitis.  What 
probably  took  place  here  was  that  he  very  slightly  injured  the 
vein  wall  when  he  strained  the  leg ;  perhaps  the  slightest  conceiv- 
able bruising  or  tearing  of  the  vein  wall.  It  just  so  happened 
that  at  the  time  of  the  injury  there  were  bacteria  circulating 
in  his  blood  having  entered  his  body  at  some  other  point  and  at 
a  different  time;  perhaps  from  a  sore  throat  or  from  a  latent 
gonorrhoea  or  from  somie  little  pimple  scarcely  worth  noticing. 
Under  ordinary  circumstances  his  blood  would  have  gradually 
disinfected  itself  and  nothing  would  have  come  of  this  general 
infection  of  the  blood.  But  when  he  injured  the  wall  of  his 
vein  he  created  there  a  point  of  lessened  resistance  in  which 
because  of  this  lessened  resistance  the  bacteria  were  able  to 
lodge  and  develop  and  set  up  an  inflammatory  process,  the 
phlebitis.  Now  phlebitis  is  proverbially  an  obstinate  disease 
and  may  even  cause  death.  It  is  important,  therefore,  to  be 
able  to  determine  in  a  convincing  way  whether  the  phlebitis 
should  be  ascribed  to  the  injury  as  a  sole  cause  or  whether  it  is 
altogether  probable  that  the  injury  was  only  a  part  cause.  As 
a  matter  of  fact  phlebitis  is  a  very  common  disease  coming  on 
without  the  slightest  suggestion  of  an  injury.  It  is  jar  more 
common  as  a  purely  spontaneous  condition  than  following  a 
trauma.  It  frequertly  follows  operations  of  any  sort.  It 
comics  on  in  the  course  of  typhoid  or  other  infectious  diseases. 
It  follows  child-birth.  It  comes  on  without  any  preceding 
event  so  far  as  one  can  determine. 

It  follows  then  that  if  the  skin  is  abraded  or  torn  £t  the 
time  of  injury  and  the  phlebitis  occurs  within  reasonable  prox- 
imity to  the  wound,  both  in  point  of  time  and  place,  and  there 
was  no  other  more  probable  cause  of  the  phlebitis  apparent, 
the  injury  should  be  conceded  as  the  cause  of  the  phlebitis. 
But,  if  on  the  other  hand,  no  portal  of  entry  was  created  at  the 
tim.e  by  the  accident,  it  is  only  reasonable  to  suppose  that  the 
injury  merely  localized  the  imflammatory  process  and  was  not  the 
sole  cause  of  it.     Neither  was  all  the  cause  external. 

The  sam.e  reasoning  should  be  applied  to  osteomyelitis 
periostitis  and  other  serious  infections  when  these  follow  injuries. 
If  the  traumatism  was  directly  applied  to  the  part  afterward  the 
seat  oj  an  injections  process,  and  the  length  of  time  elapsing  in 
accordance  with  what  is  known  of  the  developmicnt  of  these 
conditions,  the  injury  should  be  considered  a  part  cause  of  the 
disability.  If  it  fulfils  these  conditions  and  also  created  a  portal 
of  entry  for  the  infectious  organism  at  the  moment  oj  injury, 
it  should  be  regarded  as  the  probable  sole  or  practically  sole 
cause  of  the  disease  condition  and  the  company  should  assume 
that  the  accident  was  the  cause  of  the  disability  within  the 
intent  of  the  policy. 


69 

We  not  infrequently  are  asked  to  pay  claims  that  arise  in 
sequence  to  accidents  where  the  relationship  is  not  nearly  so 
close  as  in  the  above  conditions  and  yet  they  are  difficult  claims 
to  handle  in  such  manner  as  to  leave  all  hands  pleased. 

A  man  cuts  his  index  finger  and  six  days  later  develops 
scarlet  fever.  He  claims  disability  under  his  accident  policy 
for  the  whole  term  of  the  scarlet  fever  on  the  ground  that  the 
infection  entered  his  body  through  the  wound  in  his  finger, 
and  he  produces  a  certificate  to  that  effect  from  his  physician. 
(The  backbone  of  some  physicians,  under  certain  circumstances, 
sometimes  suffers  from  temporary  softening.)  Now  as  a  matter 
of  fact,  no  one  absolutely  knows  what  the  cause  of  scarlet  fever 
is;  much  less  measles.  For  many  years  it  has  been  supposed 
that  it  might  enter  the  body  through  wounds  but  this  has 
never  been  proved  and  the  tendency  of  present  day  opinion  is 
that  these  cases  are  coincidences  only.  The  probability  is 
that  the  man  received  his  infection  through  the  throat  as  usual 
and  the  burden  of  proof  to  the  contrary  rests  on  the  assured. 

The  same  is  the  case  with  Infantile  Paralysis,  claim  for 
which  as  the  result  of  a  wound  recently  came  to  my  notice. 

There  is  a  constantly  increasing  tendency  to  claim  for 
illness,  or  what  is  generally  understood  as  illness,  under  accident 
policies  and  this  tendency  is  especially  serious  when  these 
claims  are  for  death.  Where  increasing  medical  knowledge 
shows  the  claim  to  be  just  the  companies  pay,  but  where  the 
claim  is  based  upon  extravagant  guess  work  only,  the  companies 
should  firmly  resist. 

Hernia  :  —  Hernia  is  a  much  vexed  question.  No 
operating  surgeon  who  is  intimately  familiar  with  the  appearance 
of  the  structures  involved  in  the  makeup  of  the  pathological 
process  called  hernia  could  ever  ascribe  this  condition  to  anything 
resembling  a  single  tearing  or  rending  of  the  muscles  or  fasciae 
making  up  the  abdominal  wall  by  a  "single  external,  violent 
and  accidental  means,  solely  and  independently  of  all  other 
causes."  He  knows  there  has  been  no  tearing.  There  has 
been  no  rending.  The  sac  lining  is  smooth  and  glistening  like 
the  ball  of  the  eye  and  would  show  the  least  sign  of  irritation 
as  quickly.  Not  a  bit  of  hemorrhage  is  present,  no  torn  fibres, 
not  even  ecch3^mosis.  Always  the  same  orderly  arrangement 
of  layers  and  always  occuring  at  a  certain  few  spots  in  the 
abdominal   wall,    especially   in   the   so-called   inguinal   regions. 

The  word  "Rupture"  is  a  misnomer,  a  relic  of  the  time 
when  this  word  was  supposed  to  signify  the  nature  of  the  condi- 
tion. But  modern  surgery  and  the  study  of  development  in 
the  embryo  has  gradually  demonstrated  that  nearly  all  herniae 
are  due  primarily  to  the  presence  of  pouchlike  processes  present 
from  before  birth  which,  although  they  close  firmly  in  most 
individuals,  in  some,  persist  as  slender  finger-like  processes 
into  which  the  abdominal  contents  find  their  way  when  for  one 


70 

reason  or  another  the  pressure  in  the  abdomen  becomes  great 
or  the  supporting  muscles  become  less  strong.  A  sudden  strain 
or  series  of  strains  may  be  the  incident  which  first  forces  the 
abdominal  viscus  into  this  sac  and  so  for  the  first  time  calls 
attention  to  a  defect  which  must  nevertheless  have  always 
existed  as  an  incompletely  closed  pouch. 

In  the  case  of  the  ordinary  oblique  inguinal  hernia  the 
congenital  pouch  is  formed  in  the  following  manner: 

The  testis,  before  birth,  does  not  lie  in  the  scrotum  but  is 
found  high  up  in  the  vicinity  of  the  kidneys.  It  soon  begins  to 
descend  and  about  three  months  before  birth  has  reached  the 
lower  part  of  the  abdomen.  During  the  last  three  months  of 
foetal  life,  the  testis  descends  through  the  two  rings  which 
bound  the  inguinal  canal  carrying  a  sheath  like  process  of  the 
peritoneum  with  it  until  it  reaches  its  normal  position  in  the 
scrotum.  In  many  persons  this  sheath-like  process  or  pouch 
remains  open  throughout  life  as  a  slender  defect,  yet  gives  no 
trouble.  They  are  totally  unaware  of  the  defect  until  some 
strain  or  series  of  strains  forces  or  begins  to  force  some  of  the 
abdominal  contents  into  it.  When  this  occurs  the  man  is 
said  to  have  a  hernia. 

These  oblique  hemiae  are,  therefore,  due  primarily  to  a 
faulty  closure  of  the  rings  through  which  the  testis  descended 
from  the  abdomen  into  the  scrotum.  The  primary  and  funda- 
mental cause  of  the  hernia  is,  therefore,  the  above  described 
defect.  The  immediate  or  exciting  cause  may  sometimes  be 
an  accident,  but  in  these  instances  the  accident  is  not  the  sole 
cause  and  hence  not  responsible  for  the  disability  within  the 
intent  of  the  policy  contract. 

Hernia  is,  therefore,  to-day  regarded  as  a  malformation 
or  disease  rather  than  as  an  accident  and  no  up-to-date  physi- 
cian considers  them  as  anything  but  a  congenital  defect  suddenly 
or  gradually  brought  to  notice  by  the  entrance  into  these  sacs 
of  some  abdominal  viscus. 

That  this,  the  saccular  origin  of  hernia,  is  the  accepted 
view  of  present  day  surgeons  is  demonstrated  by  a  perusal  of 
any  article  on  the  subject  written  within  the  past  few  years. 

Keen's  Surgery,  Vol.  IV,  Page  17  says:  "While  rupture 
is  the  term  most  commonly  used  by  the  laity  in  describing  this 
condition,  it  is  misleading,  since  it  rests  upon  a  false  conception 
of  the  etiology.  The  term  originated  at  a  time  when  it  was 
generally  believed  that  traumatism,  or  a  tearing  of  the  muscular 
structures  by  some  direct  or  indirect  violence,  was  a  frequent 
and  important  cause.  The  great  increase  in  our  knowledge, 
as  a  result  of  the  large  number  of  operations  for  the  radical 
cure  of  hernia  that  have  been  performed  during  the  last  two 
decades,  has  proved  that  in  the  vast  majority  of  cases  'hernia 
is  a  disease  rather  than  an  accident.'  In  other  words  it  is  due 
to  a  congenital  defect,  e.  g.,  an  open  funicular  process  of  perito- 


71 

neum,  or  an  abnormal  size  of  some  normal  opening  in  the 
abdominal  wall.  This  congenital  defect,  then,  is  the  main 
cause  of  a  hernia,  while  the  immediate  or  exciting  cause  plays 
but  a  minor  role." 

Careful  discussion  of  this  whole  subject  will  be  found  in  an 
article  by  Dr.  Arthur  E.  Hertzler  in  the  Journal  of  the  American 
Medical  Association  for  November,  1913,  page  1879. 

He  says  in  speaking  of  the  ''evidence  that  all  hernias  depend 
on  the  presence  of  a  peritoneal  sac,  which  is  present  from  birth," 
that  "careful  dissections  and  study  of  tissue  removed  at  oper- 
ation are  sufficient  to  convince  one  of  its  correctness."  "I  have 
noted  repeatedly  that  in  less  than  five  days  after  the  appearance 
of  hernias  of  sudden  onset  the  union  of  sac  to  cord  has  been  made 
up  of  fully  developed  fibrous  tissue  free  from  cellular  infiltration. 
Obviously  the  union  could  not  have  taken  place  after  the  hernia 
developed."  "I  have  noted  the  same  condition  in  hernias  said 
to  have  occurred  after  traumatism." 

Considerable  discussion  on  the  congenital  origin  of  hernia 
may  also  be  found  as  follows:  "The  congenital  origin  of  hernia" 
by  R.  Hamilton  Russell,  F.  R.  C.  S.,  Eng.,  appearing  in  the 
Lancet  for  March  12th,  1904.  Also,  on  the  saccular  theory  of 
hernia  by  R.  W.  Murray,  F.  R.  C.  S.  in  the  British  Medical 
Journal  for  November  16th,  1907,  and  by  Dr.  Russell  again  in 
the  same  number  of  the  British  Medical  Journal. 

Another  discussion  accompanied  by  numerous  drawings 
appears  in  the  Surgery,  Gvnecology  and  Obetetrics,  Volume  10, 
for  1910,  page  252,  by  Dr. "^ William  Hessert. 

There  are  numerous  other  articles  in  recent  medical  litera- 
ture, all  supporting  the  same  theory,  (MacLennan  Surgery, 
Gynecology  and  Obstetrics,  September  10th,  1910,  page  57). 

W.  McAdam  Eccles  writes  that  "In  the  majority  of  cases 
a  hernia  is  of  a  gradual  and  slow  formation,  and  this  without 
any  tearing  and  breaking  of  tissue,  such  as  is  clearly  indicated 
in  the  use  of  the  word  'rupture.'  The  formation  of  the  sac  of 
a  hernia  is  a  slow  process,  for  the  parietal  peritoneum  will 
neither  stretch  nor  prolapse  sufficiently  to  produce  a  sac  in  a 
day  or  even  a  week  or  two;  in  fact  it  usually  takes  months 
for  the  sac  to  become  really  apparent. 

Hunner  says  true  hernias  are  of  gradual  formation.  In 
these  cases  the  sac  is  cogenitally  present,  or  gradually  formed 
after  birth  and  the  contents  appear  because  of  forces  acting 
over  a  long  period  of  time. 

Dr.  W.  E.  Magruder,  of  Baltimore,  says  that  hernia  is 
one  of  the  things  w^hich  are  pretty  definitely  settled  as  not  due 
to  traumatism,  unless  the  ring  is  actually  cut  by  something 
from  the  outside. 

Manl}^  after  studying  the  question  fully,  announces  that 
after  having  examined  and  operated  on  nearly  every  species  of 
hernia  he  is  able  to  say  "without  any  qualifications  whatever," 


72 

that  hernia  is  never  attributable  to  traumatism  alone;  unless 
the  violence  be  applied  by  some  hard,  heavy,  sharp  pointed 
instrument  or  substance,  which  either  punctures  or  rents  the 
abdominal  wall;  and  that  when  a  hernia  appears,  after  the 
application  of  ordinary  force,  it  can  always  be  demonstrated 
that  it  had  previously  existed,  the  accident  or  injury  being  an 
incident  only  in  its  evolution. 

Outten  advances  the  statement  that  any  surgeon  who  has 
made  a  careful  study  of  the  surgery  of  violence  will  come  to  the 
conclusion  that  traumatic  hernia  is  so  extremely  uncommon 
as  to  leave  doubt  as  to  its  verity  in  almost  every  case. 

Dr.  George  Sultan,  a  German  surgeon,  says,  "Hernias  can 
never  arise  at  the  moment  of  an  accident  or  by  a  single  augmen- 
tation of  the  intra-abdominal  pressure,  be  it  ever  so  great,  but 
make  their  appearance  gradually,"  —  "the  development  of  the 
majority  of  acquired  hernias  is  not  due  to  any  ore  cause,  but  to  a 
series  of  different  influences."  "If  the  hernia  just  appears  at 
the  time  of  the  accident,  we  may  certainly  suppose  that  the 
hernial  sac  was  either  congenital,  or  gradually  formed." 

Dr.  Wm.  B.  Coley  of  New  York,  in  Progressive  Medicine 
for  June,  1913,  Pages  50  and  51,  says  —  "Personally,  I  agree 
with  Graeser  in  von  Bergmann's  Textbook  of  Surgery,  who 
states  that  a  hernia  in  all  its  parts  can  never  be  the  result  of  a 
single  increase  in  intra-abdominal  pressure,  no  matter  how  great. 
This  is  practically  the  opinion  of  McCready,  the  great  English 
authority  on  hernia.  This  is  a  fact  not  appreciated  by  the 
laity,  and  it  has  apparently  never  been  heard  of  by  the  legal 
profession  representing  the  plaintiff.  The  idea  that  hernia  is  a 
disease,  and  not  an  accident,  is  slowly  but  steadily  gaining 
ground." 

This  question  of  hernia  has  also  come  up  in  the  various 
States  under  the  new  Compensation  Laws,  and  for  this  reason, 
many  of  the  Compensation  Commissions  in  the  various 
States  have  had  to  make  some  ruling  to  govern  their  action  in 
cases  where  hernia  is  claimed  as  the  result  of  an  industrial 
accident.  It  is  very  important,  therefore,  at  this  point  that  you 
understand  clearly  that  the  relation  between  an  accident  and  a 
hernia  is  very  different  under  an  Accident  Policy  contract 
from  what  it  is  under  the  ordinary  Compensation  Law.  Under 
an  Accident  Policy  contract  the  accident  must  be  the  sole  cause 
of  the  hernia,  independently  of  all  other  causes,  whereas,  under 
the  usual  Compensation  Law,  the  accident  does  not  have  to 
be  the  sole  cause,  but  merely  has  to  be  the  important  or  exciting 
cause,  and  even  though  other  factors  plainly  enter  into  the  man's 
disability,  if  the  accident  is  the  immediate  or  the  proximal 
cause  of  the  man's  disability,  he  is  entitled  to  benefits  of  Compen- 
sation. 

In  my  opinion,  the  experts  that  have  rendered  some  of 
the  opinions  of  the   various   Compensation  Commissions  have 


73 

not  had  this  distinction  clearly  in  mind.  It  is  interesting, 
however,  to  note  that  the  tendency  in  these  instances  is  to 
hold  that  hernia  cannot  be  claimed  for  under  Compensation. 
I  think  this  is  a  mistake,  but  it  only  goes  to  show  that  the 
modern  tendency  in  scientific  medicine  is  to  consider  hernia  a 
disease  rather  than  an  accident. 

INDUSTRIAL  COMMISSIONS  RULINGS. 

California.  In  Case  No.  61  of  Clary  vs.  Standard  Oil 
the  commission  stated  as  follows: 

"The  consensus  of  medical  and  surgical  opinion  runs  to 
the  effect  that  hernia  is  very  rarely,  in  any  proper  sense,  the 
result  of  an  accidental  injury;  that  the  accident  is  at  best  no 
more  than  the  occasion  rather  than  the  cause  of  the  malady; 
that  the  origin  of  the  condition  is  congenital  and  more  in  the 
nature  of  a  disease  than  of  an  injury. 

Nevada.  The  medical  adviser  of  the  commision  has 
officially  advised  the  commission  as  follows: 

Hernia,  or  so-called  rupture,  is  a  disease  ordinarily  develop- 
ing gradually  and  is  very  rarely  the  result  of  an  accident. 

Ohio.  The  Medical  Division  of  the  Commission  has  given 
the  following  opinion : 

"Medical  science  teaches  and  has  taught  for  the  past  20 
years  that,  which  is  now  accepted  as  a  medical  and  scientific 
fact,  being  corroborated  as  such  by  the  foremost  surgeons  of 
the  world,  i.  e.,  that  hernia  (or  so-called  rupture)  is  a  disease 
which  ordinarily  develops  gradually,  being,  very  rarely  the 
result  of  an  accident." 

The  State  Liability  Board  of  Awards  through  its  chief 
Medical  Examiner  has  issued  the  following  on  the  subject: 

It  is  possible  for  a  real  traumatic  hernia  to  exist  from  such 
a  cause  as  direct  physical  violence  to  a  hernial  region,  but  in 
the  vast  majority  of  cases,  so-called  traumatic  hernia  cases  will 
be  cases  in  which  hernia  or  the  predisposition  to  hernia  existed 
prior  to  the  so-called  accident  or  in  which,  during  the  perform- 
ance of  his  work,  the  descent  of  a  hernia  occurs,  the  work  in 
this  case  simply  furnishes  the  occasion  for  such  descent. 

The  work  is  to  be  considered,  therefore,  as  the  cause  leading 
to  the  discovery  of  the  hernia  and  not  as  the  cause  of  the  hernia 
itself. 

It  is  important  for  the  medical  investigator  to  get  all  dates 
as  specifically  and  as  accurately  as  possible.  Did  the  accident 
happen  within  the  time  covered  by  the  policy?  How  soon 
after  the  accident  did  the  disability  begin?  When  did  total 
disability  cease  or  become  partial  or  when  is  it  likely  to  cease. 
If  the  medical  examiner  is  familiar  with  the  definitions  of  total 
and  partial  disability  he  can  sometimes,  by  a  few  words,  act  as 
a  prop  to  an  unwilling  conscience  and  by  quoting  these  defini- 


74 

tions,  bring  about  a  just  claim.  Remember  the  words  total 
and  partial  disability  are  not  physiological  terms  nor  are  they 
to  be  interpreted  by  the  preconceived  ideas  of  the  insured. 
They  are  very  clearly  defined  in  the  contract. 

If  the  case  under  investigation  be  a  death  claim  or  at  all 
likely  to  result  in  a  death  claim,  all  the  above  is  important  but 
in  addition  it  should  be  remembered  that  the  death  must  be 
due  to  the  accident  alone  and  to  no  other  cause  within  the 
limits  cf  reason.  Hence,  all  matters  pertr.ining  to  the  health 
of  the  individual  before  and  at  the  tim^e  of  the  accident  are  of 
the  greatest  imiportance;  also  the  details  of  the  last  illness; 
whether  the  death  followed  in  logical  sequence  from  the  accident 
or  whether  possible  disease  or  other  factors  entered  in.  Would 
an  autopsy  probably  show  a  disease  factor  as  a  partial  cause  of 
death?  If  so  let  the  company  know  immediately  as  it  is  within 
their  right  to  dem.and  it. 

A  striking  instance  in  which  the  autopsy  revealed  a  direct 
connection  between  a  trivial  injury  and  the  cause  of  death  came 
to  our  notice  recently.  A  man  received  a  small  injury  with 
slight  laceration  of  the  leg.  He  paid  little  attention  to  it. 
Some  few  days  later  he  died  suddenly.  Claim  was  made  for 
death  under  an  accident  policy.  The  company  held  an  autopsy 
and  a  clot  was  demonstrated  in  the  vein  at  the  site  of  the  small 
injury.  This  clot  extended  continuously  into  larger  veins  until 
it  led  up  the  leg  and  into  the  great  veins  in  front  of  the  spine  in 
the  lower  part  of  the  abdomen.  Here  there  was  evidence  that 
some  of  the  clot  had  broken  off.  In  the  great  artery  to  the  lung 
was  ♦a  piece  of  this  same  clot  which  had  become  loosened  from 
its  original  site  and,  floating  up  through  the  large  veins  to'  the 
heart,  had  then  been  sent  on  into  the  great  artery  to  the  lung 
where  it  became  lodged  at  the  first  bifurcation  causing  the  man's 
death  from  suffocation.  The  chain  of  evidence  was  complete 
and  the  claim  was  imxmediately  paid. 

If  the  investigation  is  of  a  health  claim,  it  is  of  the  first 
importance  to  ascertain  when  the  disease  began.  If  the  condition 
of  ill  health  is  even  partly  the  result  of  some  chronic  disorder, 
when  did  the  underlying  pathological  process  have  its  inception? 
Was  this,  by  the  nature  of  the  case,  necessarily  prior  to  the 
issue  of  the  insurance?  For  it  is  one  of  the  fundamental  clauses 
of  the  health  policy  that  the  disability  must  be  caused  by  a 
disease  having  its  inception  during  the  life  of  the  policy.  This 
is  fair,  especially  so  in  view  of  the  fact  that  applicants  are  granted 
health  insurance  without  any  examination  as  to  their  condition 
of  health  and  entirely  on  their  own  statement  as  to  their  good 
physical  condition.  You  may  ask  why  do  we  not  examine 
candidates  for  health  and  accident  insurance  the  same  as  we  do 
those  for  Hfe  contracts?  There  are  two  principle  reasons  for 
this.  The  first  and  most  obvious  reason  is  that  the  poUcy- 
holder  will  not  pay  the  expense  of  the  necessarily  increased 


75 

premium.  And  secondly  if  applicants  were  accepted  after  a 
physical  examination  the  power  of  cancellation  and  discontin- 
uance would  have  to  be  given  up  and  health  contracts  would 
have  to  be  made  for  a  definite  period  of  time. 

With  reference  to  the  ''Beginning  of  a  disease,"  this  term 
distinctly  means  the  time  at  which  a  pathological  process  has 
its  inception.  It  does  not  mean  the  time  when  the  insured 
first  became  sick  nor  even  the  time  at  which  he  first  noticed 
something  abnormal.  Many  diseased  conditions  have  been 
progressing  for  months  or  even  years  before  the  individual  is 
aware  that  there  is  anything  the  matter  with  him.  This  is  one 
of  the  risks  that  the  insured  has  to  take.  As  a  matter  of  fact, 
however,  when  a  claim  is  settled  on  this  defense  the  company 
will  usually  be  willing  to  return  the  premium,  a  gratuity  for 
which  the  company  seldom  gets  any  thanks. 

In  the  investigation  of  a  health  claim  it  is  also  of  importance 
to  know  whether  the  insured  has  ever  suiTered  from  the  disease 
in  question  before;  or  whether  there  is  anything  in  his  past 
history  or  physical  condition  which  makes  him  a  bad  risk  for 
health  insurance;  and  this  means,  is  he  more  apt  to  be  sick  than 
the  average  man,  and,  when  sick,  is  he  apt  to  be  sick  longer? 

This  information  is  important  from  two  different  view  points. 
First,  the  underwriting  department  have  to  pass  on  the  question 
of  whether  the  risk  is  a  good  one  to  continue.  And  secondly, 
there  may  be  developed  a  material  breach  of  warranty.  The 
best  way  to  test  whether  a  breach  of  warranty  is  material  or 
not  is  to  put  the  case  up  to  the  medical  director  as  a  hypothetical 
question,  giving  the  information  to  hand,  minus  the  claim, 
just  as  though  it  were  a  new  application  being  considered  by 
the  underwriters.  Do  not  prejudice .  the  doctor  in  any  way 
by  even  letting  him  know  that  the  case  is  one  of  claim.  In 
this  way  you  will  be  able  to  determine  with  confidence  whether 
the  breach  is  material  or  not. 

Is  the  disease  in  question  covered  by  the  policy,  or  is  the 
diagnosis  being  strained  a  bit  to  meet  the  provisions  of  a  limited 
contract  ? 

If  the  investigation  is  being  made  under  a  liability  policy, 
the  patient's  own  detailed  story  of  the  accident  is  very  important. 
He  will  usually  give  this  story  with  less  reserve  and  more  truly 
to  a  doctor  than  to  any  other,  as  an  inexpressible  sense  of  confi- 
dence exists  between  an  injured  party  and  a  doctor  not  readily 
attained  by  others. 

In  further  relation  to  the  accident,  has  the  insured  any 
defect,  such  as  blindness  or  deafness  that  might  imply  less  blame 
to  the  defendant?  Is  there  anything  in  the  injured  party's 
physical  condition  that  contributes  to  the  disability?  If  so,  to 
what  extent  does  this  increase  the  disability?  How  much  pain 
has  the  plaintiff  suffered  and  what  of  suffering  is  there  for  him 
in  the  future?  How  long  will  each  of  his  injuries  last  and  what 


76 

will  be  the  natural  course  of  their  recovery?     Which  injuries 
are  permanent  and  to  what  extent? 

What  would  you  estimate  the  expense  of  his  care  to  be? 
Itemize  these  and  state  whether,  in  your  opinion,  all  this  expense 
is  necessary  or  advisable  and  how  long  it  should  last. 

Your  general  impression  of  the  patient,  his  advisers  and 
what  is  his  attitude  toward  the  whole  matter?  Remember 
that,  in  preparing  a  report  on  a  liability  case,  you  are  usually 
paving  the  way  toward  a  compromise  settlement,  but  one 
should  also  bear  in  mind  that  the  case  in  hand  may  be  a  court 
case  two  or  three  years  later.  A  doctor  should  always  keep 
carbon  copies  of  all  his  reports  carefully  filed  away  in  his  own 
private  records.     He  can  never  tell  when  they  will  be  of  service. 

When  the  examination  is  in  respect  to  Compensation  Insur- 
ance, the  problem  is  much  simpler,  as  I  have  in  part  indicated 
above.  In  what  I  have  to  say  here,  kindly  remember  that  I 
have  in  mind  the  Connecticut  Law,  but  this  Law  is  fairly  typical 
of  all  the  Compensation  Laws,  and  in  general,  what  I  have  to 
say  will  apply  to  Compensation  insurance  anywhere.  Practi- 
cally, there  are  but  three  medical  questions. 

First:  Did  the  accident  cause  the  disability?  Under 
Compensation  Insurance,  the  accident  does  not  have  to  be  the 
sole  cause,  as  we  have  already  said.  To  have  been  the  immediate 
or  exciting  cause  is  sufficient.  For  instance,  a  young  woman 
had  a  tendency  to  uterine  hemorrhages,  due  to  a  diseased  condi- 
tion of  her  womb.  She  was  employed  in  a  department  store. 
She  had  a  very  trifling  accident  which  caused  her  to  fall  on  the 
floor.  That  afternoon  uterine  hemorrhages,  to  which  she  was 
subject,  started,  necessitating  her  confinement  to  bed  for  several 
weeks,  and  eventually  going  to  the  hospital  and  undergoing 
an  operation.  The  Insurance  Company  had  to  pay  for  her 
disability,  her  hospital  expenses  and  her  surgical  fees,  although 
it  was  readily  acknowledged  that  the  disability  was  chiefly  due 
to  the  diseased  condition  of  her  womb,  and  the  fall  on  the  floor 
was  merely  an  exciting  cause.  Now,  if  this  woman  returns  to 
work,  the  employer  can  scarcely  afford  to  again  accept  her 
services  as  he  continually  runs  the  risk  that  some  trifling  acci- 
dent may  precipitate,  and  probably  will,  more  trouble  of  the 
same  sort.  He  is,  therefore,  left  the  alternative,  either  of  dis- 
charging the  woman,  which  would  be  a  hardship  both  to  employer 
and  employee,  or  of  stipulating  that  she  will  declare  herself 
exempt  from  the  benefits  of  the  Compensation  Law.  The 
latter  is  the  only  practical  way  of  dealing  with  this  sort  of  case. 
It  brings  little  hardship  to  the  woman  as  she  still  has  the  privi- 
lege of  suit  in  case  she  is  seriously  hurt. 

The  only  way,  therefore,  the  employer  can  defend  himself 
from  the  effects  of  disease  among  his  employees  is  to  have  them 
all  examined  before  employment.  Those  found  diseased  would 
have  to  be  excluded  from  employment  or  else  compelled  to  refuse 


i  i 

the  act.  It  is  doubtful,  however,  whether  this  precaution  is  a 
practical  one  because.  First:  Of  the  great  expense  of  such  care- 
ful medical  examinations.  Second:  The  difficulty  of  discovering 
hidden  abnormalities  and  disease,  as  these  are  common  among 
all  people  and  regular  yearly  examinations,  are  out  of  the 
question. 

The  second  great  question  is  that  of  the  existence  of  disa- 
bility. The  doctor  is  usually  the  accepted  judge  of  this  and 
it  is  not  always  an  easy  question  to  decide.  The  man  may 
claim  he  is  unable  to  work  and  the  insurance  company  the 
contrary.  The  doctors  must  decide.  If  a  man  has  lost  a 
thumb,  one  may  be  asked  to  state  the  proportion  of  his  earning 
capacity  lost  and  whether  or  not  it  will  decrease  with  time. 

The  third  question  is  the  prognosis  as  to  disability.  How 
long  will  this  man  be  disabled?  This  question  always  arises 
where  a  man  wants  to  make  a  lump  sum  settlement. 

Thus  it  will  be  seen  that  the  relation  of  the  medical  examiner 
to  the  personal  casualty  insurance  business  is  much  more  compli- 
cated than  in  life  insurance,  so  far  as  the  contract  is  concerned. 
An  intimate  knowledge  of  all  its  intricacies  can  only  be  acquired 
by  careful  study  and  long  experience. 

I  have  not  touched  at  all  upon  the  many  intensely  interest- 
ing problems  that  await  solution  along  the  lines  of  medico- 
actuarial  investigation.  These  present  themselves  on  every 
hand  and  some  day  will  be  worked  out.  I  have  not  yet  myself 
had  the  courage  to  invade  that  province. 

Of  one  thing  I  am  more  and  more  convinced,  namely,  that 
the  innumerable  difficulties  surrounding  the  settlement  of  claims 
under  Accident  and  Health  Policies  will  never  cease  to  increase 
until  the  Companies  issuing  these  Policies  determine  to  write  a 
Standard  Policy  paying  indemnity  for  disability  only,  regardless 
of  whether  the  cause  be  accident  or  illness,  and  without  death 
benefit  or  any  other  special  feature. 

It  is  the  difficulty  of  drawing  a  hard  and  fast  line  between 
accident  and  illness  and  the  difficulty  of  adjusting  the  special 
benefits  that  make  nearly  all  the  trouble  in  the  adjustment  of 
these  claims. 


Personal  Accident  Adjustments 


BY 

J.  M.  PARKER.  Jr. 

^tna  Life  Insurance  Comfjany 


FEBRUARY  19.  1915 


The  subject  of  this  address  is  a  large  one  to  be  covered  in 
one  paper,  for  volumes  have  been  written  upon  it.  The  payment 
of  claims  is  an  exceedingly  important  part  of  the  business  of  an 
insurance  company  —  in  fact*it  may  be  said  that  the  underlying 
object  of  a  company's  existence  is  to  discharge  its  obligations  to 
policyholders.  No  matter  how  well  fortified  a  company  may  be 
as  to  assets  and  surplus,  the  manner  in  which  it  administers  the 
disbursement  of  funds  to  policyholders  is  of  exceeding  conse- 
quence, as  it  may  constitute  the  best  recommendation  a  company 
can  have,  satisfied  policyholders  being  just  as  valuable  an  asset 
to  an  insurance  company  as  satisfied  customers  are  in  any 
other  line  of  business. 

The  importance  of  the  subject  is  indicated  to  some  extent 
by  the  amounts  that  have  been  paid  in  Accident  and  Health 
claims  by  American  companies.  According  to  stativStics  pub- 
lished by  the  Spectator  Company,  the  amount  of  Accident 
claims  paid  by  the  several  companies  in  1913  was  $9,720,753, 
and  the  Health  claims  paid  during  the  same  year  amounted  to 
$2,739,348,  total  $12,460,101,  of  which  the  two  leading  Hartford 
companies  alone  paid  $3,264,446. 

From  the  same  source  we  learn  that  the  total  amount  paid 
in  Accident  and  Health  claims  during  the  ten  years  ending 
December  31st,  1913  was  $84,243,753. 

The  ratio  of  Accident  claims  paid  to  paid  premiums  reported 
in  1913  exceeded  the  ratios  in  1909  by  a  substantial  amount  in 
nearly  every  case,  mxcaning  a  considerably  greater  volume  of 
claim  payments  in  proportion  to  premiums  received  in  1913 
than  in  1909,  due  very  largely  to  the  so-called  frills  in  poHcy 
forms. 

It  is  the  duty  of  the  claim  examiner  or  adjuster  to  satisfy 
himself  from  examination  of  the  evidence  submitted  that  a  claim 
is  a  proper  one  for  approval;  to  see  that  valid  claims  are  paid, 
and  inversely  to  withhold  approval  where  the  facts  demand. 
The  average  man  is  honest  even  in  dealing  with  corporations, 
and  a  great  majority  of  claims  are  straight,  that  is,  they  are 


79 

either  all  right  as  presented  or  they  are  straight  in  the  sense 
that  claimants  are  straightforward  in  their  statements,  but  ask 
for  more  than  the  policy  contract  entitles  them  to,  usually  through 
ignorance,  even  in  the  cases  of  business  men  of  experience. 

Ignorance  of  the  contract  on  the  part  of  a  policyholder  does 
not  warrant  the  adjuster  in  making  improper  pa3mient  of  his 
company's  funds  just  because  the  excess  amount  is  asked  for 
in  good  faith,  but  his  duty  is  frequently  rendered  difficult  in 
such  cases,  for  he  wants  to  satisfy  the  policyholder  of  the  ab- 
solute justice  of  his  position,  which  is  not  always  easy,  whereas 
in  the  case  of' a  dishonest  raid  upon  a  company's  treasury  the 
adjuster  may  conserve  his  energies  for  other  purposes. 

While  the  subject  of  this  paper  is  adjustments,  I  understand 
it  to  be  the  wish  of  those  in  charge  of  the  course  that  it  shall  deal 
with  such  office  methods  and  records  as  lead  up  to  and  are  closely 
related  with  adjustments,  knowledge  of  which  is  essential  to 
the  Home  Office  Adjuster.  While  reference  to  such  records  and 
detail  herein  may  seem  superfluous  to  those  who  are  familiar 
with  the  operations  of  the  Claim  Departments  of  Accident 
companies,  they  will  doubtless  bear  in  mind  the  fact  that  there 
are  many  interested  in  this  branch  of  the  work  who  have  little 
or  no  opportunity  in  connection  with  their  daily  duties  to  acquaint 
themselves  with  it. 

Let  us  assume  that  a  policyholder  has  performed  his  duty 
(and  there  are  duties  incumbent  on  the  policyholder  as  well  as 
the  Company)  and  promptly  notified  his  Company  of  an  injury, 
I  will  endeavor  to  outline  what  follows  at  a  Home  Office.  Most 
notices  of  injury  are  received  by  way  of  local  adjusters  or  general 
agents.  Upon  receipt  of  a  notice  at  the  Home  Office,  which 
may  be  in  the  shape  of  a  letter  or  upon  the  Company's  form  of 
notice,  the  date  of  receipt  is  stamped  upon  the  notice.  It  then 
goes  to  a  policy  index  if  the  policy  number  is  not  given  in  the  notice 
When  the  policy  number  has  been  located  the  notice  goes  to  a 
registration  card.  There  are  thousands  of  these  cards  filed  under 
agencies  and  policy  numbers,  each  giving  a  complete  history 
of  a  risk  from  the  date  of  issue  of  the  policy,  including  reference 
to  previous  insurance,  if  any,  also  other  insurance  in  force  at 
the  time  of  injury. 

From  the  registration  card  a  face  paper  or  filing  sheet  is 
filled  out  for  the  use  of  the  Claim  Division.  This  face  paper 
calls  for  such  information  as  is  necessary  to  give  the  claim  exam- 
iners and  adjusters  a  mental  photograph  of  the  risk,  including 
the  date  of  policy  or  renewal,  the  amount  of  insurance,  (inclu- 
ding accumulations  that  have  accrued,  if  any,  in  event  of  a  death 
loss  or  claim  for  loss  of  eye  or  limb)  amount  of  weekly  indemnity, 
physical  characteristics  of  the  risk,  such  as  age,  weight,  height, 
occupation  when  insured,  residence,  also  any  endorsements  or 
riders  extending  the  scope  of  the  insurance,  automobile  permits 
for  example,  issued  for  additional  premiums,  or  endorsements 


80 

or  riders  limiting  the  insurance  in  some  respect,  such  as  a  modi- 
fication of  a  poHcy  by  reason  of  the  insured  having  previously 
lost  the  sight  of  one  eye,  or  having  had  dislocations  of  such  a 
nature  that  they  are  liable  to  recur. 

The  filing  sheet  also  contains  reference  to  previous  claims 
paid  the  insured,  if  any,  so  that  the  adjuster  may  call  for  pre- 
vious files  if  desired. 

The  Claim  Department  necessarily  has  a  system  of  records 
and  files  for  the  handling  of  each  case  from  the  time  it  becom.es 
a  notice  until  its  final  disposition  as  a  paid  claim,  including  a 
follow-up  system  to  guard  against  notices  or  claims  being  over- 
looked by  reason  of  failure  to  receive  replies  to  letters  that 
have  been  written,  files  of  current  active  notices  and  claims, 
files  of  paid  claims,  an  index  of  notices  and  claims,  record  of 
claim  payments  by  states  and  by  towns,  record  of  re-insurance 
received,  etc.,  including  records  necessary  to  comply  with  the 
requiren-ents  of  the  state  insurance  departmicnts,  which  demand 
an  account  each  year  of  the  total  number  of  notices  received, 
number  who  failed  to  make  claim  after  notice,  and  number 
unpaid  at  the  end  of  the  year,  specifying  in  regard  to  the  claims 
rejected,  reduced  or  compromised  the  reasons  for  the  adjuster's 
action  in  all  cases. 

After  the  face  paper  has  been  completed  and  attached  to  the 
notice  it  goes  to  an  index  where  a  card  is  written  and  a  notice 
number  given.  This  notice  num.ber  is  used  in  correspondence 
and  records  until  the  case  becomes  a  paid  claim,  when  a  claim 
number  is  assigned  and  used  thereafter.  The  notice  is  then 
ready  for  the  Examiner. 

The  Examiner  having  looked  over  the  face  paper  with  a 
full  history  of  the  risk,  first  observes  the  question  of  the  insurance 
being  in  force.  It  is  quite  unusual  that  any  question  has  to  be 
raised  upon  that  point,  although  it  may  be  necessary  to  confer 
with  the  Division  of  Accounts  or  the  Underw^riting  Division  or 
the  Agent,  or  all  three,  to  clear  up  that  question. 

It  is  then  necessary  to  see  if  the  notice  complies  with  the  re- 
quirements of  the  policy  contract. 

During  the  past  few  years  conditions  have  changed  not  a 
little  in  this  important  matter,  but  a  large  majority  of  outstand- 
ing policies  have  not  the  latest  requirements  of  the  1914 
Standard  Provisions  States. 

A  number  of  years  ago  it  was  customary  for  policies  to 
provide  that  immediate  notice  must  be  given  in  event  of  acci- 
dent or  injury  on  account  of  which  claim  might  be  made.  Later 
instead  of  the  word  ''immxediate,"  a  phrase  was  substituted 
''as  early  as  may  be  reasonably  possible." 

Then  when  the  1912  Standard  Provisions  Laws  were  passed 
the  companies  operating  in  the  states  passing  such  laws  were 
required  to  allow  twenty  days  within  which  notice  might  be 
given  in  event  of  non  fatal  injury,   although  notice  must  be 


81 

given  immediately  in  event  of  death,  unless  such  notices  shall 
not  be  reasonably  possible. 

The  1914  Standard  Provisions  Laws  specify  the  language 
that  must  be  used,  the  clause  in  a  Disability  policy  reading 
as  follows: 

"Written  notice  of  an  injury  or  of  sickrjcss  on  which  claim 
may  be  based  must  be  given  to  the  Company  within  twenty 
days  after  the  date  of  the  accident  causing  such  injury,  or 
within  ten  days  after  the  commencement  of  disability  from  such 
sickness.  In  event  of  accidental  death  immediate  notice  thereof 
must  be  given  to  the  Company." 

The  1914  Law  further  provides  that  notice  to  any  authorized 
agent  of  the  Company  shall  be  deemed  to  be  notice  to  the 
Company. 

A  letter  is  sometimes  received  giving  notice  of  injury  that 
omits  to  state  the  date  of  injury,  circumstances,  nature  of  injury, 
policy  number  or  any  other  information  of  any  use.  It  is  much 
more  satisfactory  if  the  insured  uses  the  form  furnished  by 
the  Company. 

The  forms  used  by  most  companies  call  for  the  name, 
policy  number,  occupation  when  injured,  date  of  injury,  cause, 
nature  and  extent  of  injury,  name  and  address  of  attending 
physician,  his  estimate  as  to  further  disability,  and  statement 
of  other  Accident  insurance,  if  any,  carried  at  date  of  injury. 

The  Claim  Examiner  or  Adjuster  can  usually  get  from  a 
notice  properly  filled  out  an  idea  of  the  seriousness  of  the  case, 
and  whether  it  is  necessary  to  call  for  an  examination  by  the 
Company's  physician,  a  right  granted  to  the  Company  under 
the  policy  contracts,  to  determine  the  degree  of  injury  and 
probable  consequent  disabihty.  The  Agent  or  Local  Adjuster 
usually  attends  to  this  matter  of  medical  examinations  without 
instructions  from  the  Home  Office,  but  the  burden  of  responsi- 
bility nevertheless  rests  upon  the  Home  Office  Examiner. 

The  Examiner  must  be  familiar  with  the  various  forms  of 
policy  contracts  and  their  several  provisions  as  to  the  giving  of 
notice.  In  case  of  delayed  notice  where  the  Company  is  in  no 
different  position  by  reason  of  the  delay,  that  is  to  say,  where 
there  is  no  difficulty  in  verifying  the  fact  that  the  conditions 
claimed  to  have  existed  from  the  date  of  injury  actually  have 
existed,  denial  of  liabiHty  would  be  technical,  but  where  there 
is  long  delay  in  giving  notice,  and  disabihty  is  alleged  to  have 
existed  for  weeks,  or  even  months,  without  any  knowledge  of 
that  fact  on  the  part  of  the  agent  or  the  company,  consequently 
no  opportunity  to  have  medical  examinations  made  shortly 
after  the  commencement  of  and  during  the  period  of  disability, 
and  where  no  valid  reason  or  excuse  can  be  offered  for  delay 
in  giving  notice,  it  must  be  seen  that  the  Company's  rights 
have  been  prejudiced,  particularly  if  the  circumstances  surround- 
ing the  alleged  injury  are  obscure,  which  obscurity  might  have 


82 

been  cleared  up  by  an  early  medical  examination.  In  such 
cases  the  Claim  Examiner  or  Adjuster  is  called  upon  to  exercise 
his  judgment  as  to  the  course  to  be  pursued. 

Not  only  by  reason  of  the  amounts  involved,  but  because 
of  the  necessity  for  prompt  action  in  suspicious  cases,  death 
notices  are  given  special  attention  by  most  companies. 

Where  a  notice  is  received  advising  of  death  under  suspicious 
circumstances,  the  Examiner  must  act  promptly  calling  for  an 
autopsy  if  deemed  advisable,  and  if  negessary  placing  the  case 
in  the  hands  of  an  experienced  field  adjuster  for  investigation 
and  action.  In  event  of  the  refusal  of  the  family  of  the  insured 
to  permit  an  autopsy,  such  refusal  should  if  possible  be  obtained 
in  writing,  that  the  file  may  show  that  the  Company  was  pre- 
vented from  exercising  its  contractual  rights. 

Premiums  for  Accident  insurance  are  very  much  less  than 
those  for  Life  insurance,  and  are  not  sufficient  to  warrant  the 
payment  of  death  claims  where  the  facts  do  not  come  within 
the  scope  of  the  insurance  contract,  hence  the  necessity  of 
going  carefully  in  all  cases  of  death  where  the  circumstances  are 
suspicious. 

Next  to  death  notices,  those  of  loss  of  limb  or  sight  require 
careful  consideration  and  usually  obtain  precedence  over  notices 
of  injury  resulting  only  in  loss  of  time.  In  such  cases  as  well  as 
in  fatal  cases  the  agent  or  local  adjuster  may  order  such  investi- 
gation or  examination  by  the  Company's  medical  examiner  as 
the  facts  seem  to  demand  without  waiting  for  instructions 
from  the  Home  Office. 

If  the  notice  shows  that  the  insured  carried  large  lines  of 
insurance  with  other  companies,  it  is  possible  that  he  is  insured 
way  beyond  his  insurable  value  under  the  Company's  rules 
based  on  common  sense,  or  beyond  what  he  would  be  able  to 
carry  under  ordinary  conditions.  In  this  case  even  if  the  injury 
and  disability  actually  happened  it  might  be  necessary  to  pro- 
rate the  claim  on  account  of  over  insurance  in  a  manner  that 
will  be  explained  later,  when  we  pass  from  "notices"  to  ''claims." 

The  notice  or  subsequent  correspondence  may  show  a 
probable  change  of  occupation  since  the  policy  was  issued,  in 
which  case  the  Examiner  will  cause  an  inquiry  to  be  made, 
and  if  it  is  found  that  such  change  has  actually  taken  place, 
the  claim  would  be  prorated  in  accordance  with  the  policy 
provisions.  This  form  of  prorating  will  also  be  referred  to 
later. 

Among  the  classes  of  notices  of  injury  that  require  special 
attention  on  the  part  of  the  claim  examiner  it  may  be  in  order 
to  mention  knee  injuries,  cases  of  hernia  and  cases  where  dis- 
ability is  complicated  by  disease  conditions.  A  knee  injury 
sometimes  results  in  a  very  difficult  claim  to  handle  for  while 
there  may  be  no  doubt  as  to  an  injury  having  been  sustained, 
its  actual  nature  may  be  so  obscure  that  the  best  surgeons  are 


83 

unable  to  state  the  exact  condition,  or  if  they  are,  to  make  any- 
satisfactory  prognosis.  In  cases  of  this  kind  the  physical 
characteristics  of  the  risk  have  to  be  considered,  inasmuch  as  a 
heavy  man  or  a  man  heavy  in  proportion  to  his  height  is  not 
able  to  resume  his  usual  activities  in  event  of  serious  knee  or 
ankle  injury  as  soon  as  a  man  of  ordinary  weight  or  normal 
build. 

Disease  complications  in  connection  with  an  Accident 
claim  are  another  source  of  responsibility  for  examiners  and 
adjusters,  especially  if  there  are  indications  that  the  disease 
existed  independently  of  the  injury,  although  sickness  is  some- 
times a  legitimate  sequel  to  an  accidental  injury,  as,  for  example, 
traumatic  pneumonia,  the  Company  being  just  as  much  Hable 
for  indemnity  for  disability  resulting  from  the  pneumonia 
following  an  injury  in  such  a  case  as  from  any  other  disability 
caused  by  the  injury. 

Where  the  insured  has  Health  insurance  as  well  as  Accident, 
the  above  questions  are  simplified,  because  his  claim  may  be 
payable  under  the  Health  contract. 

Another  "bete  noir"  of  the  Adjuster  is  notice  of  injury 
alleged  to  have  resulted  in  hernia.  Hernia  rarely  results  solely 
from  an  injury,  yet  the  average  layman,  not  excepting  many 
agents,  assumes  without  investigation  or  thought  that  hernia 
which  usually  follows  some  exertion  (not  even  an  exertion 
called  accidental  in  many  cases)  is  caused  solely  by  accidental 
means,  overlooking  the  fact  that  the  condition  known  as  hernia 
does  not,  except  in  rare  cases,  such  as  a  blow  directly  upon  the 
abdomen,  result  solely  from  accidental  means  independently 
of  all  other  causes. 

It  is  interesting  to  note  that  Industrial  or  Compensation 
Commissions  in  several  states  in  passing  upon  the  hernia  question 
in  connection  with  claims  under  Compensation  policies  have 
placed  themselves  on  record  quite  clearly  to  the  effect  that 
hernia  rarely  results  solely  from  bodily  injury,  but  is  an  existing 
weakness  (in  many  cases,  if  not  a  majority  of  cases  unknown  to 
the  sufferer)  which  becomes  aggravated  or  first  brought  to  the 
surface   by   some   overexertion   or   supposed   accidental   injury. 

This  is  significant  because  some  of  these  boards  have 
members  representing  the  industrial  or  laboring  classes  who 
would  not  be  liable  to  subscribe  to  this  theory  unless  it  was 
backed  by  indisputable  evidence.  Even  so,  in  most  cases 
where  hernia  is  alleged  to  have  resulted  from  accidental  injury, 
the  adjuster  has  a  contract  on  his  hands  to  satisfy  the  claimant 
that  the  disabiUty  did  not  result  from  injury  independently 
of  all  other  causes. 

In  this  connection  please  note  that  attention  is  focused 
more  and  more  on  the  insuring  clause  than  it  used  to  be  when 
policies  had  clauses  designed  to  protect  them  against  conditions 
that  no  company  could  afford  to  insure  against  for  the  premiums 


84 

obtained  for  Accident  policies,  these  protective  clauses  having 
been  eliminated  through  the  stress  of  competition.  For  example, 
policies  formerly  had  provisions  eliminating  liability  on  the 
part  of  the  Company  in  event  of  injuries  resulting  wholly  or 
partly  while  fighting  or  while  under  the  influence  of  intoxicants. 
Such  a  policy  made  clear  the  fact  that  the  Company  would 
not  pay  participants  in  any  fight  for  results  of  injuries  sustained 
therein,  but  under  a  modern  policy  it  may  be  necessary  to 
investigate  the  circumstances  in  connection  with  the  fight,  for 
it  has  been  held  that  the  aggressor  in  a  fight  who  got  the  worst 
of  it  was  in  a  large  measure  responsible  for  his  own  injuries, 
and  that,  therefore,  they  were  not  accidental,  but  that  the 
victim  of  an  unprovoked  assault  suffered  accidental  injury 
within  the  scope  of  a  modern  policy. 

So,  in  regard  to  intoxication,  where  old  policies  eliminated 
liability  for  injuries  sustained  by  a  policyholder  while  intoxicated, 
under  the  present  day  policy  we  have  to  go  back  to  the  insuring 
clause  and  ascertain  whether  injuries  sustained  by  the  intoxicated 
person  resulted  solely  from  external,  violent  and  accidental 
means,  which  may  bring  in  the  question  as  to  whether  an  intoxi- 
cated person  knows  what  he  is  doing  or  whether  some  fool  act 
of  his  resulting  in  injury  may  be  held  to  be  accidental  because 
he  was  incapable  of  forming  an  intention. 

Correspondence  in  connection  with  a  notice  may  disclose 
physical  disability  or  disease  not  mentioned  in  the  application, 
such  disability  or  disease  being  of  such  a  nature  that  the  Com- 
pany would  not  have  accepted  the  risk  without  a  waiver  or 
perhaps  not  at  all.  For  example,  it  may  be  found  that  a  policy- 
holder with  a  dislocated  shoulder  has  had  the  same  shoulder 
dislocated  several  times,  but  made  no  mention  of  it  in  his  appli- 
cation or  he  would  have  been  required  to  sign  a  waiver  of  liability 
on  the  part  of  the  Company  for  injuries  to  that  shoulder  as  a 
condition  precedent  to  acceptance  of  the  risk,  or  it  might  be  a 
case  of  a  knee  dislocation  where  there  had  been  previous  disloca- 
tions of  such  frequency  or  of  such  a  nature  that  no  company 
would  have  taken  the  risk  at  all  with  a  knowledge  of  the  existing 
infirmity.  These  cases  offer  problems  of  another  character  for 
the  Claim  Examiner. 

The  services  of  the  Company's  local  surgeons  or  medical 
examiners  are  freely  requisitioned  not  only  in  cases  of  doubtful 
liability,  but  in  connection  with  claims  that  are  apparently 
clear  where  disability  is  long,  so  that  when  the  Company  is 
asked  to  make  large  payments  the  Examiner  has  such  medical 
advice   as  to   confirm  his  judgment   in  approving  the   claims. 

A  blank  is  provided  for  the  convenience  and  guidance  of 
examining  surgeons  calling  in  connection  with  other  information 
for  the  date  of  examination,  nature  of  injury,  external  evidence 
thereof,  surgical  operation,  if  any,  necessitated  by  the  injury, 
with  date  and  character  of  operation,  period  of  disability,  total 


85 

and  partial,  that  has  been  suffered,  with  an  estimate  of  probable 
further  duration  of  disability. 

In  serious  or  obscure  cases  the  Home  Office  Medical  Depart- 
ment plays  an  important  part,  giving  careful  attention  to  all 
questions  submitted  and  most  valuable  advice  in  connection 
with  the  handling  of  troublesome  claims. 

In  connection  with  claims  for  partial  disability,  the  Examiner 
has  to  satisfy  himself  that  the  policyholder  qualifies  under  the 
policy  conditions,  which  vary  considerably  in  the  practice  of 
different  companies. 

One  of  the  most  common  clauses  provides  for  payments  of 
fifty  per  cent,  of  the  amount  payable  for  total  disability  in 
event  accidental  injuries  prevent  the  insured  from  performing 
one  or  more  important  daily  duties  pertaining  to  his  occupation. 
Some  companies  favor  a  sliding  scale  providing  for  the  payment 
of  from  25  to  90%  for  partial  disability,  depending  upon  the 
nature  of  injuries  and  degree  of  disability  and  more  work  for 
the  Adjuster  in  practically  every  case. 

Some  companies  provide  for  payment  of  intermediate 
disability  at  the  rate  of  75%  for  such  period  as  the  insured  is 
unable  to  transact  a  major  portion  of  all  his  business  duties, 
and  partial  disability  of  50%  if  he  is  unable  to  transact  a  material 
portion  of  any  or  all  of  his  iDusiness  duties. 

Thus  far  we  have  assumed  that  no  formal  claim  has  been 
received,  and  have  referred  to  all  cases  as  "notices"  in  accordance 
with  office  practices  and  the  practical  requirements  of  some 
insurance  departments. 

When  regular  claim  papers  have  been  submitted  the  case 
may  then  be  referred  to  as  a  claim. 

Of  the  policies  now  issued,  many  of  those  written  in  the 
Non  Standard  States,  so-called,  provide  that  claim,  or  as  it  is 
called  "Affirmative  Proof  of  Loss,"  must  be  furnished  to  the 
Company  within  two  months  from  the  date  of  death,  loss  of 
limb  or  sight  or  termination  of  disability. 

The  forms  in  use  in  the  1912  and  1914  Standard  States 
allow  the  policyholder  ninety  days  within  which  to  file  proofs. 

Forms  used  in  Non  Standard  States  provide  that  no  legal 
proceedings  shall  be  brought  within  ninety  days  after  receipt 
of  proof  at  the  Home  Office,  nor  after  one  year  from  the  date 
provided  in  the  policy  for  the  filing  of  proofs. 

The  1912  and  1914  Laws  in  certain  states  allow  legal  pro- 
ceedings to  be  brought  at  any  time  after  sixty  days  from  date 
of  filing  proof,  within  two  years  from  the  time  provided  in  the 
policy  for  the  filing  of  proof. 

In  ordinary  cases  claims  are  received  with  reasonable 
promptness  after  death,  loss  of  limb  or  sight,  or  termination 
of  disability,  and  are  corroborative  of  information  obtained 
between  the  date  of  receipt  of  notice  and  of  claim.  The  blanks 
usually  furnished  policyholders  by  companies  in  connection  with 


86 

weekly  indemnity  claims  call  for  information  from  three  sources 
in  the  shape  of  claimant's  affidavit,  employer's  certificate  and 
certificate  of  attending  physician. 

The  claimant's  affidavit  corroborates  and  enlarges  upon 
the  facts  described  in  the  notice  of  injury. 

The  employer's  certificate  covers  the  time  lost  and  cause 
thereof  so  far  as  he  knows. 

The  attending  physician's  certificate  gives  information  as 
to  the  nature  and  extent  of  injury,  period  of  treatment,  period 
of  disability,  surgical  operation,  if  any,  and  hospital  confinement, 
if  any. 

Death  claims  are  usually  submitted  on  blanks  calling  for 
identification  of  the  insured,  certificates  of  clergyman,  undertaker 
and  attending  physician,  and  statements  of  eye  witnesses  of 
the  accident  and  injury,  also  an  affidavit  from  the  claimant 
supporting  his  or  her  right  to  the  amount  claimed.  In  connection 
with  a  death  loss,  after  the  examiner  has  satisfied  himself  that 
the  Company  is  liable  under  the  policy  contract,  he  must  verify 
the  title  or  interest  of  the  claimant  to  the  amount  claimed. 
If  claimants  or  any  of  them  are  minors,  the  examiner  must  see 
that  proper  documents  are  furnished  in  connection  with  the 
appointm.ent  of  guardians,  administrators,  etc. 

The  duty  of  an  Examiner  upon  receipt  of  a  claim  is  to  see 
that  the  amount  claimed  is  in  accord  with  the  policy  provisions, 
making  due  allowance  for  double  benefits,  accumulations  and 
all  other  frills,  and  with  the  evidence  submitted,  including 
certificate  of  the  insured's  attending  physician.  He  should 
also  see  that  the  insured  receives  any  benefits  he  is  entitled  to 
under  the  policy  contract  that  he  may  have  overlooked,  such  for 
example,  as  fee  for  a  surgical  operation  named  in  the  policy. 

In  some  cases  claimants'  affidavits,  employers'  certificates 
or  attending  physicians'  certificates  set  forth  information  not 
previously  furnished  having  an  important  bearing  on  the  amount 
claimed.  It  may  be  that  the  circumstances  under  which  injuries 
are  received,  show  what  did  not  appear  in  the  notice  or  subse- 
quent correspondence,  that  the  insured  had  changed  his  occupa- 
tion since  the  issue  of  policy  to  one  more  hazardous,  although 
in  a  case  of  disability  covering  any  considerable  period  of  time 
such  information  would  ordinarily  appear  in  the  notice  files 
before  the  claim  is  received. 

It  may  also  be  that  the  duties  cited  by  the  insured  in  his 
affidavit  in  support  of  his  claim  for  partial  disability  may  indicate 
that  he  is  not  properly  classified  or  has  changed  his  occupation 
since  the  policy  was  issued.  Such  cases  are  carefully  investi- 
gated in  order  that  no  injustice  may  be  done  the  policyholder. 
If  it  is  found  that  he  has  changed  his  occupation,  his  claim  would 
be  prorated  according  to  the  terms  of  the  policy  contract.  Here 
again  is  where  the  Claim  Examiner  has  to  keep  in  mind  the 
various  classes  of  policy  provisions,  but  Standard  Provision  No. 


87 

1  of  the  1914  Laws  will  answer  for  an  illustration  of  this  point. 
This  provision  specifies  that  in  event  the  insured  is  injured  after 
having  changed  his  occupation  to  one  classified  by  the  Company 
as  more  hazardous  than  that  stated  in  the  policy,  or  while  he 
is  doing  any  act  or  thing  pertaining  to  any  occupation  so  classi- 
fied, except  ordinary  duties  about  his  residence,  or  while  engaged 
in  recreation,  the  Company  will  pay  only  such  portion  of  the 
indemnities  provided  in  the  policy  as  the  premium  paid  would 
have  purchased  at  the  rate  fixed  by  the  Comipany  for  such  more 
hazardous  occupation. 

As  an  example  of  the  practical  working  of  this  clause,  let 
us  assume  that  a  clerk  in  an  office  insured  at  the  "Preferred" 
rate,  $5.00  per  thousand,  goes  into  the  automobile  business  as 
a  "Salesman,  demonstrating,  but  not  repairing  or  racing," 
classification  "Ordinary,"  premium  $8.50  per  thousand.  In 
event  of  injury  after  the  change  of  occupation  the  Company's 
liability  would  bear  the  same  ratio  to  the  principal  sum  and 
weekly  indemnity  written  in  the  policy  as  5  is  to  83^.  In  other 
words,  the  insured  by  his  change  of  occupation  has  not  rendered 
the  policy  void,  except  for  that  portion  in  excess  of  what  the 
premium  he  actullay  paid  would  have  bought  at  the  Manual 
rate  for  the  more  hazardous  occupation  to- which  he  changed. 
This  prorating  clause  works  no  injury  to  the  poHcyholder,  who 
gets  full  value  for  the  premium  paid,  but  takes  care  automatically 
of  the  change  of  occupation  to  one  more  hazardous.  It  is  better, 
however,  to  have  the  insurance  rewritten  under  a  new  policy 
based  on  a  new  application  describing  the  new  occupation,  and 
cases  that  come  to  the  notice  of  the  examiner  are  referred  to 
the  underwriter  for  proper  attention. 

Conversely  if  a  policyholder  changes  his  occupation  to  one 
classed  less  hazardous  than  that  under  which  he  was  insured, 
it  is  his  privilege  and  for  his  interest  to  have  the  policy  canceled 
and  a  new  one  written  at  the  lower  rate. 

The  claimant's  affidavit  may  specify  other  insurance  not 
referred  to  in  the  application  for  the  policy  or  the  notice  of  injury, 
sufficient  on  its  face  to  constitute  over  insurance,  making  it 
necessary  to  ascertain  when  and  under  what  circumstances  the 
other  insurance  was  obtained.  If  he  applied  for  several  policies 
that  he  did  not  carry  when  first  insured  under  the  policy  on 
account  of  which  claim  is  made,  there  are  several  courses  to  be 
pursued,  dependent  upon  the  form  of  policy  contract. 

At  one  time  policies  had  prorating  clauses  based  upon 
weekly  indemnity,  and  a  good  many  of  those  policies  are  still 
in  force  all  over  the  country.  This  provision  is  to  the  effect 
that  if  the  total  insurance  for  weekly  indemnity  carried  by  the 
policyholder  is  in  excess  of  his  average  weekly  earnings,  the 
Company  is  not  liable  for  such  weekl}^  indemnity  in  excess  of  its 
pro  rata  share  of  the  aggregate  weekly  indemnity  of  the  entire 
insurance  carried.     If  he  carried  a  lot  of  other  insurance  at  the 


88 

time  of  applying  for  the  policy,  on  account  of  which  claim  is 
made,  and  made  no  reference  to  the  other  insurance,  under  the 
older  forms  of  policies  he  committed  a  breach  of  warranty, 
rendering  the  whole  contract  null  and  void. 

Under  a  1914  Standard  Policy  if  he  had  a  lot  of  other 
insurance  and  did  not  mention  it  in  the  application,  the  Com- 
pany's liability  would  depend  under  the  contract  upon  whether 
the  falsity  of  his  statemients  in  failing  to  refer  to  the  other 
insurance  was  either  with  intent  to  deceive  the  Company  or 
materially  affected  the  acceptance  of  the  risk  or  the  hazard 
assumed  by  the  Company. 

Under  the  1914  policy  again  if  the  insured  loads  up  with  a 
lot  of  other  insurance  after  applying  for  a  policy  he  must  notify 
the  companies  that  have  previously  issued  policies  of  his  addi- 
tional insurance,  or  in  event  of  claim  they  will  only  be  liable 
for  such  portion  of  the  indemnity  they  promised  as  said  indem- 
nity bears  to  the  total  amount  of  like  indemnity  in  all  policies 
covering  such  loss.  Here  again  the  Examiner  is  required  to 
use  exceeding  care  to  determine  as  to  the  Company's  actual 
liability. 

The  operation  of  the  prorating  clause  based  upon  earnings 
is  as  follows:  A  policyholder  whose  application  disclosed  no 
other  insurance  is  insured  for  $25.00  per  week,  his  earnings 
being  at  the  time  he  w^as  insured  and  thereafter  $40.00.  When 
his  claim  comes  in  it  appears  that  he  has  since  taken  policies 
in  three  other  companies  for  $25.00  per  week  each,  total  $100.00, 
considerably  more  than  his  earnings.  Under  one  of  the  forms 
above  referred  to  the  first  company's  liability  would  be  40/100 
of  the  amount  insured,  so  that  he  would  receive  $10.00  per  week 
from  that  Company.  The  other  three  companies  would  not 
have  gone  on  the  risk  had  they  known  his  earnings  were  so 
much  less  than  the  weekly  indemnity  applied  for,  so  they  had 
a  right  to  deny  liability  on  the  ground  of  breach  of  warranty  as 
to  earnings.  They  miay  instead  of  doing  that  prorate  on  the 
same  basis  as  Compan}^  No.  1,  so  that  the  claimant  receives 
40/100  of  the  am.ount  named  in  each  policy,  a  total  of  $40.00 
per  week,  the  amount  of  his  earnings,  instead  of  receiving  over 
twice  as  much  as  he  lost. 

Under  the  last  form  above  mentioned,  the  1914  policy,  if 
he  had  failed  to  notify  the  first  company  of  his  three  other 
policies,  the  first  company  would  be  liable  for  one-fourth  of 
the  indemnity  written  in  the  policy,  that  being  the  ratio  of 
that  policy  to  the  total  insurance.  The  situation  of  the  other 
three  companies  is  different,  as  they  could  maintain  that  the 
applicant's  statements  as  to  his  earnings  materially  affected  the 
acceptance  of  the  risk,  that  no  one  of  them  would  have  issued 
a  policy  if  the  truth  had  been  told,  and  that,  therefore  there  is 
no  liability  on  their  part  except  for  the  return  of  premiums  paid. 


89 

If  when  he  applied  he  had  SIOO.OO  per  week  insurance 
and  sufficient  earnings  to  warrant  that,  and  his  earnings  shrunk 
to  $40.00,  the  companies  would  have  no  right  under  the  1914 
law  to  prorate  his  claims. 

Claims  under  Health  policies  are  in  many  ways  handled 
along  the  sam^e  general  lines  as  those  under  Accident  policies, 
although  the  conditions  are  simplified  to  some  extent  by  the 
contract  requiremxcnt  of  regular  attendance  by  a  physician 
and  b}^  the  fact  that  comparatively  few  of  the  Health  policies 
in  force  provide  for  paym.ent  for  disability  not  total. 

There  are  several  classes  of  Health  policies,  probably  the 
best  known  and  most  widely  sold  being  those  called  General 
Health  policies,  or  the  Health  portion  of  Disability  policies 
which  also  provide  Accident  insurance.  These  General  Health 
policies  cover  disability  from  any  disease  provided  it  is  contracted 
during  the  term  of  the  insurance,  it  being  beyond  the  bounds 
of  reason  to  expect  a  company  to  pay  claims  for  disease  conditions 
existing  at  the  time  of  or  prior  to  the  issue  of  policy,  unless  the 
Comipany  is  cognizant  of  the  facts  through  statements  in  the 
application  and  willingly  accepts  the  risk. 

In  Health  as  in  Accident  insurance  while  m.ost  claims  are 
straight,  those  that  are  not  require  much  m^ore  time  on  the  part 
of  the  adjuster  in  proportion  to  their  numxber. 

In  case  of  a  recently  issued  policy  he  must  observe  whether 
the  conditions  causing  disability  existed  at  the  time  policy  was 
issued.  If  reasonable  doubt  upon  that  point  exists  he  calls 
for  a  micdical  examination  by  the  Comipany's  physician,  whose 
report,  including  the  history  of  previous  illnesses,  if  any,  should 
indicate  the  advisability  of  further  investigation  into  the  question 
of  pre-existing  disease. 

As  in  Accident  insurance,  concealm^ent  cf  material  facts 
in  the  application  as  to  previously  existing  sub-normal  physical 
condition  may  constitute  a  breach  of  warranty  rendering  the 
contract  void,  or  under  the  1914  Standard  forms  failure  to  state 
such  facts  with  intent  to  deceive  the  Comipany,  or  when  such 
failure  m.aterially  affects  the  acceptance  of  a  risk,  may  justify 
the  Company  in  disapproving  claim. 

There  are  occasional  cases  where  upon  presentation  of  a 
claim  for  disability  from  illness  the  medical  reports  including 
those  of  the  attending  physician  disclose  the  fact  of  undoubted 
existence  of  disease  long  prior  to  the  taking  out  of  insurance, 
although  probably  without  knowledge  of  the  insured. 

There  are  not  a  few  diseases  of  the  slumbering  type  where  a 
recurrence  is  probable,  any  one  of  which  would  bar  a  risk  for 
Health  insurance.  There  are  classes  of  disease  dormant  in 
their  nature  that  may  become  active  in  connection  with  other 
disease  or  injury,  for  example,  diabetes,  tuberculosis  or  syphilis, 
any  one  of  which  pre-existing  may  cause  serious  complications 
in  connection  with  an  injury  or  an  illness  of  another  nature. 


90 

No  company  would  knowingly  take  a  risk  with  any  one  of  these 
diseases,  but  would  decline  it  promptly.  The  fact  that  the 
insured  unfortunately  or  fortunately  did  not  know  of  the  pre- 
existence  of  disease  when  applying  does  not  make  the  risk  any 
more  desirable  for  the  Company,  which  has  issued  a  policy 
based  upon  a  clean  bill  of  health,  and  would  not  have  accepted 
a  penny  of  the  policyholder's  money  had  it  been  in  possession 
of  the  facts  at  the  time  policy  was  applied  for.  Hence  the 
necessity  of  guarding  that  point  in  policy  contracts. 

While  all  Health  claims  go  to  the  Medical  Department 
for  approval,  the  services  cf  that  Department  are  of  special 
value  in  connection  with  such  questions  as  this  of  pre-existing 
disease  and  other  purely  medical  questions  that  may  arise 
during  the  pendency  of  a  notice  and  claim.  The  blanks  used 
for  notices  of  illness,  reports  of  medical  examinations  and  claims 
are  along  the  general  lines  of  those  used  in  connection  with 
Accident  insurance,  differing  as  may  be  necessary  on  account  of 
the  different  nature  of  the  causes  of  disability. 

The  practices  of  companies  vary  in  the  methods  of  paying 
claims.  Some  companies  pay  claims  only  upon  Home  Office 
approval,  as  some  companies  write  all  policies  cit  the  Home 
Office,  others  allow  local  adjusters  to  settle  claims  within  fixed 
limits,  all  other  cases  being  referred  to  the  Home  Office.  Some 
companies  have  special  supervising  adjusters  covering  large 
territories,  and  practically  all  companies  have  adjusters  reporting 
direct  to  the  Home  Office  who  may  be  sent  anywhere  occasion 
requires. 

When  the  amount  due  the  policyholder  is  determined  claims 
are  paid  through  checks  drawn  at  the  Home  Office  or  through 
drafts  drawn  upon  the  company  by  authorized  adjusters. 
Hom_e  Office  checks  and  Agents  draft  forms  may  contain  releases 
upon  their  backs  which  must  be  signed  when  checks  and  drafts 
are  endorsed  for  deposit  or  may  be  so  worded  on  the  face  that 
the  endorsement  is  sufficient  release.  Different  forms  of  releases 
are  used  dependent  upon  whether  payments  are  for  death,  loss 
of  sight  or  limb,  partial  weekly  indemnity  payment  in  long 
claimis  or  final  weekly  indemnity  payment. 

In  connection  with  the  matter  of  releases,  the  Home  Office 
Examiner  must  not  overlook  the  special  requirements  in  cases 
of  minors  referred  to  above  in  connection  with  death  losses, 
also  in  cases  of  bankrupts  or  insane  persons,  or  when  a  company 
has  been  garnisheed  in  connection  with  amounts  due  or  supposed 
to  be  due  from  a  policyholder,  not  that  a  comxpany  would  unneces- 
sarily delay  discharge  of  its  just  obligations,  but  that  it  must 
do  so  in  such  a  manner  that  it  will  not  be  called  upon  to  make 
duplicate  payment  to  some  contending  interest  that  might 
have  been  overlooked. 

A  large  proportion  of  the  entire  number  of  claims  handled 
go   through   without   trouble,   but   there   are   cases   sufficiently 


91 

out  of  the  ordinary  run  to  make  a  material  draft  upon  the 
adjusters'  stored  up  wisdom.  I  do  not  refer  to  cases  poorly 
prepared  that  have  to  be  looked  into  carefully  because  they 
look  doubtful,  but  which  when  the  fog  blows  away  join  the  file 
of  paid  claims  where  they  should  have  gone  earlier,  but  cases 
where  the  evidence  obtained  in  connection  with  a  notice,  or 
after  its  receipt,  indicates  that  there  is  no  liability,  yet  where 
doubt  exists  as  to  the  advisability  of  absolutely  denying  liability. 
In  such  cases  the  Examiner  is  confronted  with  the  problem  of 
whether  to  deliver  claim  blank  if  requested  by  the  insured. 
He  may  conclude  to  do  so  with  a  letter  reserving  the  Company's 
rights,  so  that  the  delivery  of  blank  may  not  be  held  to  be  an 
admission  of  liability. 

Standard  Provision  No.  6  of  the  1914  Law  provides  that 
the  Company  will,  upon  receipt  of  notice,  furnish  the  claimant 
such  forms  as  are  usually  furnished  for  filing  proofs  of  loss,  and 
that  if  such  forms  are  not  so  furnished  within  fifteen  days  after 
receipt  of  such  notice,  the  claimant  shall  be  deemed  to  have 
complied  with  the  requirements  of  the  policy  as  to  proof  of 
loss  upon  submitting  within  the  time  fixed  in  the  policy  for 
filing  proofs  of  loss  written  proof  covering  the  occurrence, 
character  and  extent  of  the  loss  for  which  claim  is  made. 

If  it  is  evident  that  the  circumstances  in  a  claim  are  such 
that  the  company  should  absolutely  deny  liability,  the  company 
would  place  itself  in  an  unfavorable  light  at  least  by  furnishing 
blanks  and  letting  the  insured  go  to  the  trouble  of  filling  them  out. 

The  Examiner  must  bear  in  mind  the  fact  that  denial  of 
liability  has  been  held  to  waive  defects  of  notice  and  proof 
and  to  waive  the  provision  that  suit  cannot  be  brought  within 
a  specified  period  following  the  da,te  of  furnishing  proofs, 
so  that  upon  denial  of  liability  the  insured  may  bring  suit  at  once. 

It  may  be  understood  from  the  above  suggestions  that  there 
are  many  demands  upon  the  legal  and  medical  lore  that  an  exami- 
ner has  acquired  in  his  experience  where  he  can  act  without  con- 
ferring with  the  legal  or  medical  departments. 

It  is  not  necessary  to  employ  an  attorney  to  collect  any 
valid  claim  from  any  reliable  company,  but  a  man  with  a  doubt- 
ful claim  is  prone  to  place  it  in  the  hands  of  an  attorney. 

Since  the  Compensation  laws  have  replaced  Liability  laws 
to  such  an  extent  in  some  states  the  income  of  a  certain  class  of 
attorneys  has  been  seriously  affected,  and  the  claimant  has 
less  trouble  than  before  to  find  an  attorney  who  will  take  his 
case,  no  matter  how  good  it  may  be.  It  is  necessary,  therefore, 
for  a  company  to  have  competent  attorneys  to  whom  it  may 
turn  in  case  of  need,  and  Home  Office  claim  examiners  and 
adjusters  have  lists  of  such  attorneys.  However,  the  compara- 
tively few  cases  that  are  litigated  by  the  local  companies  is  a 
credit  to  their  liberality  and  business  methods. 


92 

My  frequent  reference  to  doubtful  cases  is  simply  because 
of  the  fact  that  doubtful  claims  absorb  far  more  time  and  thought 
of  examiners  and  adjusters  in  proportion  to  their  number  than 
do  clear  claims,  which  far  outnumber  the  doubtful  or  crooked 
cases,  and  which  in  hundreds  follow  the  channel  of  the  necessary 
routine  without  creating  a  ripple. 

Very  suspicious  cases,  when  recognized  as  such  at  the 
Home  Office  (and  the  earmarks  are  usually  prominent)  may  be 
placed  in  the  hands  of  special  adjusters.  These  adjusters  are 
supposed  to  have  supernatural  powers  of  locating  weak  spots  in 
the  armor  of  dishonest  claimants,  and  the  results  they  achieve 
would  strengthen  that  supposition.  As  a  matter  of  fact,  the 
special  adjuster  is  a  composite  of  a  diplomat,  detective,  physician, 
lawyer  and  all-around  good  fellow,  who  can  face  any  claim  prob- 
lem and  meet  any  man  on  his  own  ground.  That  the  necessity 
for  such  adjusters  exists  is  shown  by  the  files  of  every  important 
company  writing  Accident  and  Health  insurance. 

It  is  impossible  in  a  paper  of  this  length  and  character  to 
make  more  than  a  passing  reference  to  the  value  of  the  services 
perform.ed  by  the  special  field  adjusters  in  protecting  companies 
against  most  brazen  attempts  to  collect  money  under  the  guise 
of  claims  under  Accident  policies,  but  the  young  man  in  the 
Home  Office  Claim  Department  or  in  a  branch  office  or  general 
agency  office  who  may  be  looking  forward  to  a  field  position, 
whose  office  training  is  a  valuable  preliminary,  will  run  across 
many  cases  which  will  not  only  show  how  far  some  people  will 
stoop  to  gain  dishonest  ends,  but  how  the  adjuster  meets  the 
varied  problems  that  confront  them. 

The  work  of  claim  examiners  and  adjusters  like  other 
work  has  its  share  of  routine,  but  it  has  more  than  its  share  of 
variety  and  interest  in  the  questions  to  be  considered  and 
problems  to  be  solved. 

As  previously  stated  a  large  proportion  of  people  are  honest 
even  in  dealing  with  "soulless  corporations,"  and  a  very  large 
percentage  of  Accident  and  Health  claims  pass  through  the 
files  of  a  well  organized  company  without  friction  or  delay,  so 
that  a  claimant  for  weekly  indemnity  or  for  loss  of  a  hand,  or 
the  beneficiary  under  a  death  loss,  receives  the  amount  due 
without  red  tape  or  needless  delay,  and  a  list  of  promptly  paid 
claims  is  about  the  best  advertising  an  agent  can  carry  in  his 
pocket. 


Advertising  as  a  Factor  m  tne  Selling  of 
Accident  Insurance 

BY 

HARRY  PORTER 

Tne  Frank  Prcsbrey  Comf)any,  New  York  City 


FEBRUARY  26.  1915 


Whoever  talks  accident  insurance,  advertises  it.  And  it 
is  safe  to  presume  that  the  growth  of  accident  insurance  is  in 
direct  ratio  to  such  pubHcity.  Some  agents  are  better  pubHcity 
agents  for  their  company  than  others,  but  all  contribute  their 
part  if  they  only  speak  the  name  of  the  concern  they  represent. 

To  us  who  build  advertising  campaigns  falls  an  extremely 
difficult  problem  —  one  that  is  a  radical  departure  from  a 
campaign  that  advertises  a  commodity  for  human  consumption. 
The  process,  however,  is  very  similar.  In  the  planning  of  any 
advertising  campaign,  we  must  first  look  at  what  we  have  to 
sell.  Then,  we  must  consider  the  possible  consumer  and  how 
to  reach  him.  We  must  study  his  mode  of  living,  where  he  lives, 
what  his  needs  are  and  what  his  possible  needs  may  be.  We 
must  take  into  consideration  his  position  in  society,  his  income  — 
and  develop  in  our  own  minds  a  fair  appreciation  of  the  degree 
to  which  we  can  sell  him.  Given  the  necessary  article,  properly 
made,  sold  —  with  the  price  right,  we  then  must,  like  a  sensitive 
piece  of  wax,  cover  the  mind  of  the  consuming  public  and  register 
its  impressions. 

Now,  we  reach  men  and  women  largely  through  the  emo- 
tional side  of  their  natures.  Some  fifteen  years  ago,  when  we 
commenced  the  advertising  of  the  modern  and  sanitary'-  bath- 
room, we  could  not,  nor  did  we  try  to,  sell  bathtubs  — 
as  bathtubs.  The  public  at  large  knew  little  or  nothing  about 
bathtubs,  or  the  daily  bath.  Rather,  we  sold  to  the  household 
the  pride  of  the  possession  of  a  snowy-white  and  sanitary  bath- 
room. We  took  advantage  of  the  primitive  emotions  of  the 
housewife  and  stimulated  her  to  inquiries  by  shaming  her  be- 
cause her  neighbor  had  a  snowy-white  bathroom  and  she  did 
not.  We  taught  her  the  joy  of  the  daily  bath  and  of  running 
w^ater,  —  the  effect  of  water  and  the  daily  bath  upon  her  growing 
children,  —  the  added  value  in  rent  or  in  the  final  sale  price  of 
the  home  itself.  In  other  words,  we  analyzed  the  emotions  of 
the  consumer  and  in  fourteen  years  there  never  has  been  a  practi- 


94 

cal  advertisement  giving  size,  weight,  density  of  enamel,  or  any 
technical  matter  regarding  these  equipments. 

The  successful  shoe  dealer  appeals  to  the  vanity  of  the 
woman  or  to  the  comfort  of  the  man.  The  Advertising  Manager 
of  a  breakfast  food  does  not  sell  breakfast  food  through  his 
advertising,  but  economic  nourishment,  strong  bones  and  sinews 
for  the  child  —  ease  of  preparation,  etc.,  etc.  So,  as  we  sell 
cleanliness,  pride,  nourishment,  —  in  accident  insurance  we 
sell  prctection.  It  is  fair  to  assume  that  no  one  takes  out  an 
accident  insurance  policy  unless  he  is  under  some  obligation, 
and  probably  the  most  common  obligation  is  the  wife.  It  is 
impossible  to  believe  that  anybody  would  ever  take  out  an 
accident  policy  unless  he  were  under  obligation  to  some  other 
person,  —  for  whose  future  he  worries.  The  woman,  therefore, 
must  enter  largely  into  any  advertising  plan  we  make.  The 
man  does  not  insure  himself,  but  rather  protects  his  wife  and 
his  children.  The  man  is  disinterested  in  accident  insurance, 
—  his  excessive  ego  does  not  permit  him  to  believe  that  he  can 
be  hurt  himself.  He,  therefore,  must  be  reached  through  his 
obligation  and  through  fear  for  that  obligation.  And  so  we 
find  that  the  basis  of  any  accident  insurance  solicitation  or 
advertising  plan  must  begin  with  the  primitive  emotion  of  fear. 

All  men  are  primitive,  as  are  all  women.  The  lower  we  go 
in  the  social  grade,  the  more  evident  are  these  emotions.  The 
higher  we  go  in  the  social  grade,  the  more  carefully  they  are 
concealed,  but  they  are  comparatively  strong  with  all  people, 
The  man  who  controls  great  things,  and  who  sits  in  a  high  place, 
feels  just  exactly  the  same  as  does  his  clerk,  and  is  moved  by 
the  same  emotions  and  the  same  fears.  You  and  I  naturally 
presume  that  the  big  man  whom  we  regard  with  awe  thinks 
and  feels  differently  than  we  do.  But,  he  doesn't.  He  fears 
for  his  position.  He  worries  about  his  finances  and  trembles 
like  any  ordinary  citizen  in  a  dangerous  place.  He  is  just  an 
ordinary  soul  surrounded  by  his  position. 

The  mind  is  constantly  open  to  suggestion.  Have  you  seen 
this  play?  It's  wonderful.  Have  you  tried  this  cigar?  Its 
flavor  is  delightful.  Have  you  met  Mrs.  so-and-so?  She  is 
charming. 

So  it  is  with  any  mind.  The  openness  to  suggestion  is  an 
open  door  to  attack.  If  you,  as  a  friend,  say  to  me,  —  "You're 
looking  badly"  —  my  door  is  open.  All  the  fears  for  myself 
march  to  the  front  in  an  instant.     I  discover  that  I  do  feel  badly. 

Fear,  because  it  is  constantly  with  us,  is  most  readily  sug- 
gested. The  only  man  who  was  without  fear  was  Adam  — 
he  had  no  vanity  to  be  hurt.  No  one  ever  praised  him.  There 
was  no  one  with  whom  he  might  compare  himself.  He  had  no 
one  before  Eve  came  —  whom  he  might  love  —  no  one  to  lose. 
I  cannot  imagine  any  other  physical  manifestation  without  fear. 


95 

Even  the  little  child  is  jealous,  vain,  afraid.  Age  nor  pride 
in  power  brings  us  to  the  point  where  we  can  say  good-bye  to 
these  fears. 

In  elementary  things,  all  feel  alike,  —  the  rich,  the  poor, 
the  high,  the  low.  Just  as  with  the  breakfast  food  that  fills  the 
stomachs  of  the  high  and  low  every  morning  in  the  year  —  we 
can  proceed  in  accident  insurance  advertising  to  reach  all  people 
in  the  sam^e  way.  Now,  as  the  elementary  and  common  emotion 
in  the  sale  of  accident  insurance  is  fear,  the  advertising  itself 
must  be  planned  and  written  to  take  advantage  of  that  emotion. 
This  fear  must  not  be  approached  with  the  explosion  of  a  bomb, 
but  in  an  insidious  and  careful  way,  for  we  are  talking  to  people 
with  intelligence,  and,  in  fact,  this  very  intelligence  is  one  of 
our  greatest  assets  in  that  it  is  a  stimulant  to  the  fear  itself. 

Mere  statistics,  or  cold  and  formal  arguments,  meet  with 
very  little  response  in  the  sale  of  any  commodity.  In  advertising 
infant  food  to  mothers  —  we  no  longer  advertise  the  food  alone. 
We  proceed  rather  on  an  understanding  of  the  enormous  love 
of  the  mother  for  her  child  —  her  anxiety  regarding  it  —  her 
tender  solicitude  for  it  —  her  ignorance  regarding  its  care.  We 
enter  her  home,  through  the  advertisement,  as  the  doctor 
enters.  We  build  through  helpful  suggestion,  through  solicitous 
thought  of  her  child,  through  the  fostering  of  a  faith  in  the  intent 
of  the  firm  that  makes  the  food  so  that  she  forgets  there  is  a 
commercial  attitude  and  sees  only  a  sincere  effort  to  minimize 
infant  mortality  and  thus  turn  sorrow  into  joy  for  the  mother- 
hood of  the  country. 

Cold  and  formal  arguments  in  accident  advertising  and 
selling,  except  as  a  supplementary  series  of  arguments,  lack 
warmth  of  appeal  because  they  compel  a  man  to  think  on  an 
unpleasant  subject.  Accident  advertising  in  the  past  compelled 
thought.  It  made  a  man  sit  down  and  figure.  Toda  y  by  taking 
advantage  of  his  known  primitive  emotions,  we  do  all  he  has 
to  do.  We  propel  him  into  a  decision  by  making  up  his  mind 
for  him.  After  we  have  roused  his  interest,  his  fears,  we  tell 
him  what  next  to  do.  We  make  him  sign  the  coupon  and  we 
leave  him  little  else  to  do  but  to  fill  this  out  and  send  it  in,  or  we 
break  down  his  inertia  by  our  constant  suggestion  —  so  that 
he  meets  the  agent  with  the  bars  let  down.  I  can  best  illustrate 
our  logical  method  of  pursuit  in  accident  insurance  advertising 
by  illustrations  of  the  current  compaign  of  the  ^^tna  Life  Insur- 
ance Company. 

*  Advertisement  No.  1  is  based  on  plain  ordinary  unadul- 
terated fear  but,  just  as  in  the  old-fashioned  revival  meeting, 
we  show  coincidentally  the  way  to  salvation.  The  illustration 
was  drawn  to  show  seven  types  of  men,  ordinarily  to  be  met 
with  by  the  average  man.    The  caption  reads:    ''One  of  every  7 

*Mr.  Porter  had  posters  on  exhibition  showing  the  different  advertisements  to  which 
he  referred,  cuts  of  which  are  reproduced. 


96 


One  of  Every  7  Men  is  Killed  or 

Injured  by  Accident  Each  Year. 

Which  Will  It  Be  ? 

You  may  be  the  one.  Your  chance  is  no  better  than  those  of  the  other  six.  Pro- 
tect yourself  and  your  family  now — while  you  can.  Three  cents  a  day  will  do  it 
if  you  are  in  a  "Preferred"  occupation.  The  cost  of  a  couple  of  newspapers 
brings  $1,250  to  $3,250  in  case"  of  death  by  accident,  $5  to  $10  weekly  income, 
$1,000  to  $3,000  for  loss  of  two  limbs  or  eyes,  $500  to  $1,500  for  loss  of  one  hand, 
foot  or  eye,  $250  for  death  from  any  cause.     Larger  amounts  at  proportionate  cost. 


mm 


mm 


/CTNA-IZE 

If  you  have  other  policies,  add  this  because  it's  so  good.  If  you  have  no  other 
policy,  get  this  one  now.  You're  in  danger  every  moment.  Send  the  coupon  for 
the  whole  story  and  protect  your  family  while  you  can. 

You  Get  a  Weekly  Income  when  Disabled  by  Accident 


It  isn't  only  railroad  wrecks  and  shipwrecks 
and  falling  elevators  you  have  to  fear. 

One  man  was  hit  in  the  eye  by  a  snapping 
rubber  band.  It  put  him  in  bed  for  six  weeks. 
He  was  ^tna-ized,  so  he  drew  his  weekly  in- 
demnity. 

One  man  was  struck  in  the  head  with  a 
baseball.  He  had  to  have  a  surgical  operation 
and  was  unable  to   leave   his   home  for  three 


weeks.     He  drew  his  weekly  JEtna.  benefit 
and  ^tna  paid  for  his  operation. 

One  man  tripped  on  a  flight  of 
stairs,  fell,  broke  his  arkle,  went 
to  bed  for  two  months.     He      /'      .,•••'     ,.••' 
was  yEtna-ized,  so  he  drew  '    /'      ...-••'    /'''  / 
a  weekly  income  and      /'      ,.  '    ./'     ..•■■\^ 
turned    his    hospital       /'  "         '  ** 

bill  over  to  Mtn&.       / 


Send  the  Coupon  for  the  whole  story 

.ETNA  LIFE  INSURANCE  COMPANY 

Drawer  1341  HARTFORD,  CONN. 

The  largest  company  in  the  world  writing  Life,  Accident,  Health        ^,,\«*^* 

and  Liability  Insurance  ^^>v>>*"'       ^e>- 

Agency  opportunities  for  all  Casualty  and  Bondingr  lines        /        -?»* 


/•  .■■■■■' ^■■■■■''.^■■:^:^' 


No.  1 


men  is  killed  or  injured  by  accident  each  year"  —  Will  it  be  you? 
Advertisement  No.  2  —  one  of  the  most  primitive  of  this 
series  —  is  based  on  the  idea  of  arousing  fear  from  an  economical 
standpoint  and  we  have  taken  advantage  of  the  well  known 
phrase,  "Keep  the  wolf  from  your  door".     I  wish  to  say  that  in 


97 


every  one  of  these  advertisements  every  phrase  was  planned 
to  create  and  hold  the  interest  and  that  every  one  of  them  is 
intended  to  be  a  personal  lesson  and  appeal  to  each  man  who 
reads  it.     You  will  note  that  the  salient  point  of  No.  2  is  the 


Keep  the  Wolf  From 
YOUR  Door 

AS  long  as  you  are  well  you  know 
you  will  pay  your,  way  ;  but  if 
from  a  clear  sky  there  falls  upon  you 
some  accident,  or  some  illness,  where 
will  you  be  ?    Than  it  will  be  too  late. 
Now  is  the  time  to  be  careful. 
Send  this  coupon  —  it  will  be  your 
first  step  on  the  road  to  safety. 
Typhoid  and  pneumonia  and 
grippe    come    to    the    strongest 
without  warning.      One  man   in 
seven  dies  or  is  injured  from  an 
accident  every  year. 

>€TNA-IZE 

Take    out    this  Accumulative  Disability 
Policy.  It  protects  your  wife  against  your 
death — it  protects  you  against  accident 
— and  sickness,  too. 

Consider  this:  out  of  128,000  claims  paid 
by  the  iEtna— 24,000  were  for  falls    4.00(i 
for  burns  and  scalds  — 5,800  for  cuis 
with  edged  tools  or  glass— 5,000  for 
crushed  fingers — 4,000  for  step- 
ping on  nails  or  glass— hundreds 
for  tripping  over  mats  or  rugs, 
for  splinters  in   hands   or 
feet  and  for  crush*^d  toes 
— 2,500  for  blood  poison- 
ing.     Every  step  you 
take  you  are   liable 
tosome  such  acci- 


dent as  these. 


We  Pay  You  Up 
To  $50  a  Week 

If  you  are  engaged  in  a  "Pre- 
ferred'^' occupation,  and  under  55, 
all  it  will  cost  you  is  3  60  a  year.   For 
that  small  sum— we  will  pay  you  $25 
a  week  as  long  as  you  live,  if  you  are 
disabled  by  an  ordinary  accident,  or 
$50  a  week  if  disabled  by  a  railway, 
steamship,  or  burning  building  acci- 
dent. ^' 

Half  the  above  for  partial  disa-      <!^'" 
bility.  /•     .. 


And  we  will  pay  you  $25  a  week 
up  to  fifty-two  weeks  if  you  are  sick. 
We  will  pay  hospital  charges  or  for  a      ^ 
surgical  operation.  ^ 

If  you  are  killed  in  an  accident,  if  you      ^    .. 
lose  two  limbs  or  both  eyes,  we  will  pay      ^ 
from  $5,000  to  $15,000.     Half  as  much  for      ^^jjiJ^     /    _.. 
loss  of  one  hand,  foot  or  eye.  xjiJ^     ..-'    / 

#      •'    / 
There  is  one  sure  way  to  keep  the  Wolf      #      ,-•'    /     / 
from  your  door — that  is  to  send  this  coupon      ^ 
today.     It  costs  you  nothing: — it  binds  you       ^ 
to  nothing.     SEND  IT  BIGHT  NOW  !  /^ 


'"'S- 

/4?^ 


^TNA  LIFE  INSURANCE  COMPANY 

Drawer  1341  HARTFORD,  CONN. 


Agency  opportunities  for  all  Casualty  and  Bondingr  lines 


ONN.         /^       ..      ,..      ^"^^    <M?  V^^*^c*o° 


No.  2 


98 


interest-rousing  phrase   "Keep  the  wolf  from  your  door".    There 
is  a  sub-caption,  "Now  is  the  time  to  be  careful".    You  are  asked 
as  a  way  out,  to  ^tna-ize.     Immediately  following  this  is  the 
assurance  that  if  you  ^Etna-ize  "We  pay  you  up  to  $50  a  week," 
—  and  at  the  end  is  an  urgement  to  do  it  NOW. 


^ 

%w^ 


'«^3 


At  a  time  like 

how  would  a  check  for  $40()\help? 

rAID  up  in  the  hospital— with  his  income  stopped— with  big  expenses  for 
J  nurses  and  doctors  —  this  man  was  helped  towards  recovery  by  the 
check  for  $400  that  came  to  him  promptly  each  eight  weeks  from  the  iEtna 
Life.  He  had  been  careful  in  time.  He  had  taken  out  an  Mtx\3.  Compre- 
hensive Health  Policy  that  made  his  income  safe  in  case  of  sickness. 

yETNA-IZE 

You  may  feel  fine  today  —  tomorrow  a  sudden  illness  may  come.  The 
strongest  is  more  liable  than  the  weakest  because  the  strongest  takes  the 
least  care.  Protect  yourself  now.  If  you  take  out  an  ^tna  Comprehen- 
sive Health  Policy  you  will  get: 

$50  a  week  for  six  months  if  you  are 
confined  to  a  hospital  — $25  a  week  for  a 
year  if  you  are  prevented  by  sickness  from 
doing:  your  work  (even  if  you  do  not  hzve 
to  stay  at  home) — $12.50  a  week  if  after 
your  total  disability  you  still  lose  half  your 
business  time. 

$25  a  week  for  100  weeks  —  nearly  two 
years— if  you  lose  the  sight  of  both  eyes  by 
disease,  or  the  use  of  both  hands  or  leet  or 
one  hand  and  one  foot  by  paralysis.  Also  fees 
for  surgical  operations  resultingf  rom  illness. 

This  is  only  one  of  the  Etna's  big  line 
of  Health,  Accident  and  Disability  policies, 


which  meet  every  need  of  every  man.  Ycu 
can  get  an  Accident  Policy  for  as  little  as 
three  cents  a  day. 

The  day  your  policy  is  issued  your       .y 
insurance  begins.      This    coupon      ^* 
brings     you    the    whole    story —      y'^ 
then  you    can   judge  for   your-       y 
self  whether  you  can  go  one        ^      ,.■■' 


day  longer  without    this 
means  of  safety. 

Send    the    cou-        y 
pon  now,  while   it        • 
laatyour 
hand. 


^TNA  LIFE 

Drawer  1341 


INSURANCE    COMPANY 

HARTFORD,  CONN. 


The  largest  company  in  the  world  writing  Life,  Accident, 

Health  and  Liability  Insurance 

Agency  opportunities  for  all  Casualty  and 

Bonding  Lines 


No.  3 


99 


In  No.  3  a  most  obvious  situation  is  illustrated.  There 
isn't  a  man  living  who  doesn't  know  that  at  a  time  like  this  a 
check  for  $400  would  help  appreciably. 


''The  iETNA  will  take  care  of  them 

if  anything  should  happen  to  me^^ 

THAT'S  the  thought  that  will  make  your  mind  at  ease  when  you  are  at  your 
office  desk  hereafter,  if  you  send  this  coupon  right  now. 

Every  year  more  men  are  hurt,  more  men  are  killed  by  accidents.  Today  the 
startling  toll  is  one  man  in  seven  —  one  man  in  seven  killed  or  injured  by  accident. 
And  no  human  being  can  tell  when,  where  or  how  an  accident  is  going  to  happen  to 
him.  In  train  or  street  car,  on  a  boat,  in  an  elevator,  falling  down  stairs,  the  smallest 
slip,  and  it  may  be  too  late.    Now,  while  you  can, 

y€TNA-IZE 


Send  the  coupon  and  let  us  tell  you  about  the 
wonderful  ^tna  Accumulative  Accident  policy ; 

the  policy  that  increases  every  year  you  own  it 
—  annually  for  five  years— so  that  if  you  start 
at  $5,000,  the  sixth  year  it. is  worth  at  least  $7,500 
and  your  premium  remains  the  savie. 

Let  us  tell  you  how  this  policy  will  pay  as 
much  -as  $15,000  if  you  lose  your  life,  or  two 
limbs  or  both  eyes;  how  it  will  pay  half  as 
much  if  you  lose  one  hand,  foot  or  eye;  how 
it  will  pay  hospital  bills,  operation  fees,  sur- 
geons' fees ;  how  it  will  pay  you  $50  each  week 
as  long  as  you  live  if  you  are  totally  disabled; 
how  it  will  pay  you  $25  each  week  if  you  are 


just  partially  disabled. 

^tna-ize  — and  no  matter-  what  accident 
may  come,  you  will  at  least  know  that  your 
wife  and  your  children  are  taken  care  of. 

It  is  not  in  your  power  to  prevent 
accidents,  but  it  is  in  your  power  to 
make  those  accidents  bear  as  liKht- 
ly  as  possible  on  yourself  and 
those  who  depend  on  you. 
Send  this  coupon  today. 
For  the  sake  of  your 
family— don't  neg- 
lect this  chance. 


iETNA  LIFE  INSURANCE  COMPANY 

Drawer  1341        HARTFORD,  CONN. 
The  largest  company  in  the  world  writing  LifCt 
Accident,  Health  and  Liability  Insurance 

Agency  opportunities  for  all  Casualty 
and  Bonding  lines 


■■■'^tX^. 


<^1 


^-^% 

<<^\^1 


'S^^t^'. 


-j^<:^im^xm 


No.  4 


100 


In  No.  4  the  protective  idea  with  an  underlying  motive 
of  fear  and  a  strong  feminine  appeal  is  illustrated.  It  is  impos- 
sible to  believe  that  the  average  man  who  has  a  wife  and  children, 
does  not  visualize  himself  and  his  relations  to  them  in  this 
picture. 


It's  Your  Wife 
^Who  Hands  You 
^This  Coupon 


SHE  knows  you  are  in  danger  of  accident 
every  minute.  She  knows  that  one 
man  in  every  seven  was  accidentally  killed 
or  injured  last  year  and  that  you  may  be  the  one 
this  year.  She  knows  that  even  if  you  escape 
accident  you  are  likely  to  be  sick  any  time. 

She  knows  that  if  you  send  this  coupon  today,  she 
and  the  children  will  be  protected  fully.  Now,  while 
you  can,  while  you  are  safe — 


/CTNA-IZE 


mm 


Protect  yourself  against  accident — 
protect  yourself  against  sickness.  It  is 
not  only  railroad  wrecks  and  shipwrecks 
and  falling  elevators  you  have  to  fear. 
A  case  of  grippe,  an  attack  of  pneu- 
monia, of  rheumatism,  a  sprained  ankle, 
cut  hand,  fall,  any  of  these  may  stop 


your  work  and  cause  you  worry  and  loss, 
^tna-ize  and  you  will  draw  a  weekly 
income  from  us  and  overcome  all  that 
If  you  are  engaged  in  a  "Preferred" 
occupation,  and  under  50  years  of  age, 
$60  a  year  is  all  it  will  cost  you.  For 
that  small  sum— 


We  Will  Pay  You  $25  a  Week  As  Long  As  You  Live 


if  you  are  disabled  by  any  accident,  or  $50  a  week 
if  disabled  by  a  railway,  steamship,  or  burning 
building  accident.  And  we  will  pay  you  $25  a 
week,  up  to  fifty-two  weeks,  if  you  are  sick. 
We  will  pay  hospital  charges  or  for  a  surgical 
operation. 

If  you  are  killed  in  an  accident,  we  will  pay 
your  wife  $5,000  or  $10,000  the  first  year  you 
ere  insured  and  add  $500  or  $1,000  each  year  for 


five  years,  paying  thereafter  $7,500  or  $15,000. 

If  you  lose  two  limbs  or  both  eyes  by  .ac- 
cident we  will  pay  you  the  same  amounts. 
One-half  of  these  amounts  will  be  paid 
you  for  loss  of  one  hand,  one  foot 
or   one  eye   by   accident.      The  ^^\\v 

coupon  costs   you  nothing  ^^^ss'-""'''' 

and   it    puts  you  on  the  ^^^\so''*''     ..• 

road  to  safety.     Send  <.#'''' 

it  today.  X'      ..•■    ..•• 


iETNA   LIFE   INSURANCE   COMPANY 

Drawer  1341  HARTFORD,  CONNECTICUT 


Th€  largeat  company  in   the   world    writing  Life,  Accident, 

Health  and  Liabilitu  Insurance. 
Ascnqr  opportanitiea  for  all  Casaaltr  and  BondinK  lines  ,.\\' 


No.  5 


c^'^ 


101 


In  No.  5  there  is  also  a  strong  feminine  apppal — ''It's 
your  wife  who  hands  you  this  coupon."  Here  again,  the  protec- 
tive idea  is  played  on  strongly  and  the  element  of  fear  is  figured. 

No.  6  is  an  advertisement  intended  to  make  people  act 
quickly.      It    is   essentially   a    reply   producing   advertisement. 


The  Next 
Important  Thing 
for  You  to  do  — 


Mail 

this  Coupon 

Today 


DON'T  wait  for  accident  or  sickness  to  come  to  you.  One  man  in  seven  was 
killed  or  injured  last  year-  by  accident.  Many  thousands  of  our  policy-holders 
were  laid  up  by  illness.  Don't  take  chances.  Look  out  now  while  you  can.  Make 
things  easier  for  yourself  and  yours  when  the  accident  or  sickness  does  come.  Read 
this  letter  from  a  woman  in  Ohio  —  "I  don't  know  what  I  would  have  done  if  my 
husband  had  not  carried  your  policy.  It  is  all  I  have  to  raise  the  children  on  while 
he  is  sick.     I  have  seven  —  the  oldest  only  15."    How  about  your  wife  ? 

y€TNA-IZE 


A  sudden  attack  of    typhoid  —  an  ulcerated 
throat  —  a  quick  grippe  followed  by  pneumonia 

—  an  operation  for  appendicijtis  —you  don't  know 
when  you  are  going  to  be  sick.  As  for  accidents, 
consider  the  manager  of  the  department  store 
in  Atlanta  who  was  so  badly  hurt  by  a  flying  nail 

—  or  the  girl  in  Dallas,  Texas,  whose  clothing 


caught  fire  from  the  exhaust  of  a  motorcycle 
motor  —  or  the  man  in  Providence,  R.  I.,  who 
was  injured  by  a  passing  lunatic.  These  are  not 
exceptions.  We  note  such  things  every  day  as  the 
demands  for  weekly  indemrfities  come  in.  Things 
that  seem  absurd  but  they  may  put  a  man  in  /' 
bad  for  six  months. 


Protect  Yourself  With  An  Accumulative  Disability  Policy 


If  you  are  totally  disabled  by  any  ordinary 
accident,  we  will  pay  you  $25  a  week  as  long  as 
you  live,  or  $50  a  week  if  you  are  disabled  by  a 
railway,  steamship,  elevator  or  burning  build- 
ing accident.  And  if  you  are  sick  with  any  ill- 
ness that  confines  you  to  the  house  we  will 
pay  you  $25  a  week  for  a  year.  If  you  are  killed, 
your  wife  will  get  from  $5,000  to  $15,000.      If 


you  lose  two  limbs  or  both  eyes 
we  will   pay  you  $5,000  to 
$15,000.  Half  as  much  for  one 
hand,  foot  or  eye. 

Send  the  coupon.    It 
costs   nothing   and 
brings    th 
story. 


JET^A  LIFE   INSURANCE   COMPANY 

Drawer  1341  HARTFORD,  CONN. 

The  largeat  company  in  the  world  writing  Life,   Accident,  Health 

and  Liability  Insurance  ^.v-"" 

Agcnoy  opportunities  for  all  Casualty    and  Bonding  lines         ^^'^"^      -i 


\^\ 


No.  6 


''The  ne^t  important  thing  for  you  to  do  —  Mail  this  coupon 
tqdaj.'o  is.sha.wu  in'. large  type  by  the  side  of  a  picture  of  a  man 
actually  putting  the  coupon  into  the  envelope.  The  magazine 
is  featured  on  the  table  beside  him  with  the  coupon  cut  out. 
Every  attempt  possible  has  been  made  to  overcome,  by  sugges- 
tion, the  inertia  of  the  possible  reader. 

Now,  in  all  of  these  advertisements  you  will  note,  if  you 
are  an  agent  or  solicitor,  that  much  the  same  style  of  argument 
has  been  raised  as  is  raised  in  your  own  talk  to  the  possible 
purchaser.  If  you  will  look  over  your  own  experiences  carefully, 
you  will  find  that  this  same  fear  which  we  have  written  and 
pictured  is  the  salient  part  of  your  own  successful  talk,  —  and 
yet  this  campaign,  as  all  other  wisely  planned  campaigns,  has 
an  underlying  educational  appeal.  We  presume  that  we  are 
arousing  an  interest  month  by  month,  year  by  year,  that  will 
aid  the  agent  greatly  in  making  sales.  Of  course  a  great  many 
policies  are  written  from  each  advertisement,  but  there  is  a 
cumulative  growth  that  bears  dividends  in  years  to  come. 

These  advertisements  appear  in  a  series  of  national  maga- 
zines that  we  select  largely  for  their  peculiar  hold  on  a  certain 
following.  We  tell  our  story  to  this  large  circulation  many  times 
a  year  —  and  the  advertisements,  themselves,  vary  in  such  a 
way  that  it  is  hoped  that  every  intelligent  man  shall  be  interested. 
The  very  importance  of  an  advertising  campaign  of  this  nature, 
its  very  breadth  in  its  appeal  to  all  intelligent  men,  demand 
on  the  part  of  the  agent  unusual  co-operation.  As  it  is  mani- 
festly easier  to  sell  a  well  known  commodity,  so  it  should  be 
manifestly  easier  for  the  agent  to  link  up  himself  in  his  own 
locality  with  a  nationally  advertised  accident  insurance  company. 
This  scheme  of  linking  up  serves  to  make  the  advertising  cam- 
paign stronger  in  every  way. 

No  reader  of  the  advertising  pages  in  any  magazine,  who 
is  naturally  familiar  with  the  advertisements  that  he  sees,  or 
with  this  series  of  advertisements  that  I  have  discussed  with 
you,  can  fail  to  read  with  more  than  usual  interest  the  local 
advertisements  along  the  same  lines.  There  cannot  fail  to  be 
a  growth  of  new  interest  in  his  mind  regarding  this  concern 
and  its  policies,  which  is  most  assuredly  of  help  to  the  local 
agent.  It  serves  as  an  introduction  for  him.  Let  me  make 
this  point  clear.  If  I  go  to  you  with  a  letter  from  a  personal 
friend,  no  office  boy  can  shove  me  away  on  the  plea  that  you 
are  too  busy  to  see  me,  —  and  no  agent  will  find  the  bars  closed 
when  he  approaches  a  man  who  is  not  only  familiar  with  the 
national  advertising,  but  who  has  linked  up  the  local  campaign 
in  the  local  paper  with  the  agent's  name.  One  great  fault  of  the 
local  advertising  campaign  has  been  the  feeling  on  the  part  of  the 
local  agent  that  he  should  receive  immediate  inquiries  and 
immediate  business  from  his  occasional  advertisement  in  the 
local  papers.     He  must  realize  that  this  advertising  depends 


103 

upon  its  cumulative  value  —  that  one  advertisement  cannot 
create  the  lasting  impression  that  is  demanded.  No  store  on 
earth  can  build  up  a  business  on  one  advertisement  —  or  ten 
advertisements.  He  must  keep  his  advertising  going  all  the 
time.  Let  the  agent  pick  out  the  best  paper  in  his  town.  Let 
him  run  a  series  of  advertisements  of  at  least  two  or  three  a 
week  in  good  position,  and  if  he  will  do  this  steadily  and  earnestly 
for  at  least  a  year,  he  will  find  that  he  is  realizing  a  very  good 
income  upon  his  investment.  He  may  not  get  all  his  money 
back  the  first  year,  but  he  will  be  putting  out  his  advertising 
money  at  large  interest. 

Now,  the  local  advertising  campaign  should  not  require 
a  great  expenditure  of  money.  The  advertisements,  themselves, 
need  not  be  large  —  a  single  column  advertisem.ent,  6  inches 
long  is  sufficient,  for  this  size  advertisement  proper] y  constructed 
and  illustrated  will  command  attention  on  an  advertising  page 
of  any  newspaper.  The  question  of  the  advertising  matter  for 
the  local  papers  must  be  considered  as  carefully  as  that  for  the 
national  campaign.  It  must  be  a  direct  appeal  to  the  people 
who  most  need  accident  insurance.  It  must  be  written  in  a 
popular  vein,  but  the  same  laws  that  govern  a  national  advertis- 
ing campaign  must  also  govern  the  local  advertising.  The 
advertisements  so  frequently  run  in  the  local  paper  with  Life, 
Accident,  Fire,  Indemnity,  Coal,  Water  and  Kindlings  all 
linked  together  are  obviously  a  terrific  waste  of  space.  The 
mere  statement  of  the  fact  that  so-and-so  writes  such-and-such 
policies  for  such-and-such  a  company  is  equally  a  waste  of  time 
and  money.  Neither  of  these  give  any  good  reason  why  the 
prospective  customer  should  take  out  a  policy.  No  advantage 
is  taken  of  the  need  of  the  possible  customer  —  nor  is  any 
knowledge  of  his  desires  and  his  fears  capitalized.  Equally 
weak  is  the  mere  statement  of  a  company's  standing  and  its 
assets  and  its  board  of  directors,  which  I  note  frequently  dot 
the  pages  of  the  Hartford  papers.  They  do  not  create  anything, 
—  they  do  not  accomplish  anything,  —  they  meet  or  fill  no  need. 

In  the  series  of  local  advertising  prepared  for  the  ^tna 
Company,  you  will  note  that  they  are  written  in  a  colloquial 
vein.  There  is  no  statement,  for  instance  in  Advertisement  No.  1  * 
as  to  what  happened.  There  is  no  picture  of  the  accident,  but 
his  wife  is  seen  telling  another  woman  how  wonderful  it  was 
that  he  had  a  Disability  Policy.  And  the  advertising  itself  is 
written  in  a  popular  vein  to  meet  the  popular  thought  on  that 
subject  and  to  create  a  feeling  in  the  miind  of  each  one  who 
reads  it,  that  it  would  be  a  wonderful  thing  to  have  such  pro- 
tection personally. 

In  No.  2  Mrs.  Jones  talks  to  the  grocer  about  what  an  ^tna 
Policy  has  done  for  her.  You  will  note  the  same  popular  appeal 
as  in  No.  1. 


104 


I  was  worried  sick  until 
he  told  me — 

WHEN  he  was  put  to  bed.  I 
couldn't  figure  out  how  we 
were  going  to  make  ends  meet.  It 
takes  almost  every  cent  he  earns 
to  keep  us  going. 

But  the  next  day  he  said:  "Don't  worry, 
dear.  It  cost  me  so  little  that  I  forgot  to 
tell  you  I'd  taken  out  an  y^TNA  ACCU- 
MULATIVE DISABILITY  -POLICY." 

Doctor  says  he's  a  pretty  sick  man,  but 
will  pull  through  all  right.  And  that  policy 
brings  us  $50  a  week  while  he's  too  sick 
to  go  out— and  $25  a  week  afterward 
while  he  can't  attend  to  his  work. 

You  can't  imagine  how  relieved  I  am. 
With  that  money  coming  in  regularly,  we 
don't  have  to  worry. 

>€TNA-rZE 

—  protect  yourself  and  your  loved  ones. 
Write  or  telephone,  and  let  us  tell  you 
about  this  policy. 

No.   I 


Yes,  Mr.  Jones 

is  still  sick 

GOING  on  his  ninth  w^eek  now. 
But  he  doesn't  want  for  any- 
thing. You  know  I'm  buying  him 
the  best  there  is,  just  as  if  nothing 
had  happened. 

He  never  earned  a  big  salary, 
but  he  always  kept  up  his  ytTNA 
ACCUMULATIVE  DISABILITY 
POLICY.  It  doesn't  cost  much, 
and  here  it  is  paying  us  $25  a 
w^eek  every  four  weeks. 

We  won't  have  to  break  into  our  little 
savings  account,  because  of  that  policy.  It 
certainly  has  relieved  us  all,  I  tell  you. 

>^TNA-IZE 

Look  ahead  to  the  time  when  YOUR  sal- 
ary may  be  cut  off  by  illness  or  accident- 
How  about  the  wife  and  children  then'- 

Let  us  explain  to  you  how  easy  it  is  to 
protect  them.     Call  or  write. 

No.  2 


In  No.  3  the  injured  man  tells  his  friend  what  a  fortunate 
man  he  was  to  have  a  policy  of  this  sort.  This  type  of  adver- 
tising is  essentially  inferential.  It  simply  depicts  the  same 
scene  in  any  one  of  a  million  homes  of  people  who  are  not  fortu- 
nate enough  to  be  protected  by  accident  insurance. 

Ever3^thing  I  have  said  about  the  importance  of  capitalizing 
the  human  and  primitive  elements  in  advertising  applies  w4th 


105 


equal  force  to  the  direct 
work  pf  the  agent.  He 
should  analyze  the  foibles 
and  the  peculiarities  of  each 
man  with  whom  he  talks 
insurance.  He  should  make 
each  prospect  an  individual 
study.  He  should  bend  his 
appeal  to  the  type  of  man 
he  solicits — keeping  always 
in  mind,  however,  that  the 
salient  emotion  in  every 
prospect,  whatever  his 
obligation  —  be  it  wife  or 
mother —  is  fear. 

He  should  not  endeavor 
to  merely  sell  a  policy,  just 
as  he  would  so  much  mer- 
chandise, but,  he  should 
plan  to  make  a  man  intro- 
spective, so  that  he  will 
realize  how  unfair  he  is  to 
those  dependent  upon  him 
when  he  fails  to  carry  acci- 
dent insurance,  and  thus 
get  him  to  virtually  sell 
himself. 

I  have  often  wondered 
how  any  man  selling  in- 
surance —  whether  life  or 
accident  —  could  help  but 
be  other  than  a  better  man 
and  a  better  salesman  be- 
cause of  it. 

To  believe  in  the  thing 
you    sell    is    the    cardinal 
principle  of  selling-success. 
It  inspires  enthusiasm.     It 
intensifies    natural    selling 
ability.    It  shows  in  every 
word  you  say  —  radiating 
sincerity  and  winning  con- 
fidence. 
And  what,  may  I  ask,  could  an  agent  have  greater  belief 
in  than  the  fact  that  it  is  every  man's  duty  to  carry  accident 
insurance  —  every  man's  duty  to  insure  his  earning  power  so 
that  if  accident  should  befall  him  his  family  will  still  be  pro- 
vided for? 


Just  a  little  touch 
of  Grippe 

—  that's  all  that  is  wrong  with  me. 
Bill ;  but  it's  kept  me  in  the  house 
for  four  long  weeks.  That's  a  long 
time  to  be  out  of  work. 

Like  most  of  us.  Bill,  I  was  big  and 
husky  and  hadn't  put  aside  anything 
against  just  such  a  siege  as  this.  I'd  have 
been  up  against  it — with  the  wife  and  kids 
—if  I  hadn't  taken  out  an  /ETNA  ACCU- 
MULATIVE DISABILITY  POLICY. 

That  policy  is  paying  us  $50  a  week, 
Bill  —  and  will  while  I  am  here  in  bed. 
And  it  costs  —  well,  so  little  that  it  don't 
matter  now. 

All  the  worry  off  my  shoulders.  Bill, 
just  because  I  had  thought  to 

>«TNA-IZE 

And  how  about  YOU?  Are  YOU 
protected  ?  Why  not  write  us  and  let 
us  explain  this  policy? 

No.  3 


106 

^  The  insurance  agent  is  doing  more  than  selHng  insurance  — 
he  is  doing  a  national  welfare  work  that  contributes  in  an 
inestimable  way  to  the  country's  measure  of  contentment 
through  the  safeguarding  of  the  family  income. 

How  can  you  make  yourself  a  bigger  factor  in  this  work  — 
how  can  you  increase  your  volume  of  business  and  thus  increase 
your  personal  income  ?  That  depends  upon  yourself  —  upon 
the  direction  of  your  efforts  and  the  degree  of  efficiency  you 
put  behind  them. 

Advertise  in  your  local  newspaper  by  all  means  but  advertise 
correctly  and  persistently.  However,  do  not  let  your  aggressive- 
ness end  there.  Bring  into  play  every  auxilliary  force  that 
you  can  muster.  Take  advantage  of  every  factor  that  will 
add  the  slightest  percentage  to  the  possibilities  of  increased 
selling-success.  Do  not  solicit  promiscuously  or  spasmodically 
but  follow  a  carefully  defined  and  systematic  plan  of  attack. 

If  I  were  an  agent,  I  would  compile  a  list  of  the  men  in  my 
community  who  by  reason  of  the  nature  of  their  businesses 
and  their  responsibilities,  should  prove  most  susceptible  to  my 
appeal.  I  would  keep  a  card  index  system  of  their  names, 
addresses,  vocations,  etc.  I  would  make  it  my  business  to  call 
on  a  specific  number  of  these  men  every  day.  The  result  of 
my  calls  would  be  indicated  on  my  cards.  Thus  I  would  always 
have  at  my  finger  tips  a  complete  history  of  each  individual 
prospect's  case.  The  inestimable  value  of  such  a  system  is 
obvious.  The  efficiency  of  my  solicitation  would  be  infinitely 
increased  because  it  would  be  based  on  exact  knowledge  of  the 
attitude  of  the  prospect  toward  accident  insurance  and  adapted 
to  his  particular  case. 

By  letter  and  pamphlet,  I  would  circularize  this  list  con- 
stantly, not  so  much  with  the  idea  of  getting  direct  returns,  but 
for  the  purpose  of  planting  the  seed  and  being  in  almost  direct 
personal  contact  with  my  prospects  all  the  time,  so  that  my  name 
would  be  linked  up  inseparably  in  their  minds  with  the  thought 
of  accident  insurance.  And,  perhaps,  of  even  more  importance 
is  the  fact  that  if  letters  and  other  literature  are  prepared  properly 
they  breathe  the  agent's  personality  —  and,  subconsciouvsly, 
in  time,  the  prospect  regards  him  as  a  person  whom  he  intimately 
knows.  I  would  keep  in  touch  through  the  mails  with  my 
entire  list  of  selected  prospects  at  least  once  a  month  —  hut 
every  month.  I  would  regard  this  as  just  as  much  a  business- 
necessity  as  the  paying  of  my  office  rent. 

I  would  not  attempt  to  tell  my  whole  story  in  any  one  of 
these  letters  or  leaflets,  but  simply  emphasize  a  single  thought 
each  time  calculated  to  drive  home  the  importance  of  accident 
insurance. 

Just  as  in  newspaper  or  magazine  advertising,  in  order  to 
circularize  successfully,  it  must  be  done  periodically  and  per- 
sistently. 


107 

Another  phase  of  my  intimate  personal  follow-up  of  pros- 
pects would  be  the  following:  Immediately  after  calling  on 
a  man,  whether  my  efforts  had  proved  successful  or  not,  I  would 
send  him  a  personal  note  thanking  him  for  the  courtesy  of  the 
interview.  This  would  tend  to  show  my  appreciation  of  the 
business  given,  and  thus  gain  increased  good  will  and  a  stronger 
possibility  of  my  being  recommended  to  others  —  or  it  would 
give  me  an  opportunity  to  present  my  appeal  in  a  new  way  while 
the  question  was  still  fresh  in  the  prospect's  mind. 

As  a  most  effective  part  of  almost  any  follow-up  work 
through  the  mails  I  would  suggest  an  idea  which  is  based  on  the 
psychological  fact  that  if  you  have  something  definite  to  show 
a  man  you  are  more  apt  to  arouse  his  interest  and  thus  succeed 
in  getting  him  into  a  receptive  state  of  mind  than  if  you  simply 
generalize. 

To  illustrate :  —  Call  attention  in  one  of  your  letters  to  a 
marked  paragraph  or  section  of  an  enclosed  leaflet,  which,  in 
view  of  the  attitude  of  the  prospect  toward  accident  insurance, 
should  be  of  personal  interest.  Mark  this  paragraph  or  section 
heavily  with  ink.  It  is  a  matter  of  observation  that  not  only 
the  marked  section  will  be  read,  but  the  entire  leaflet,  due  to 
the  manner  in  which  it  has  been  introduced.  It  is  very  possible 
that  there  is  nothing  especially  new  in  my  recommendations 
regarding  the  character  of  the  intimate  field  work  that  should 
be  done  by  the  agent  in  order  to  further  develop  his  business. 
You  probably,  at  various  times,  have  tested  the  ideas.  But,  — 
did  you  back  up  your  tests  with  courage?  It  takes  time  for  the 
leaven  of  any  advertising  work  or  efficienc^^-method  to  show 
results.  Its  fruits  are  not  for  the  timid  —  but  for  the  man  who 
looks  ahead,  not  from  week  to  week  or  from  month  to  month, 
but  from  year  to  year  —  for  the  man  with  sufficient  courage  to 
"hold  on"  when  he  might  be  tempted  to  ''slide  back." 

Plan  to  carry  on  an  intimate  and  persistent  follow-up  work 
for  a  year,  and  you  will  be  certain  to  see  gratifying  results. 


Metnods  oi  Securing  and  Training  Agents 
ana  Develof)ing  Territory 


L.  N.  DENNISTON 

The  Travelers  insurance  ComJ)any 


MARCH  5.  1915 


A  good  insurance  agent  is  a  rare  quantity  and,  when  found, 
a  joy  forever. 

I  presume  there  is  one  best  way  to  find  and  secure  good 
agency  material.  I  have  not  found  it  and  I  do  not  know  of 
any  one  that  has.  It  is  said  that  if  you  scratch  a  Russian  you 
will  get  a  Tartar.  It  may  be  so.  But,  finding  a  real  Russian 
in  these  days  is  simple  compared  to  the  task  of  finding  a  real 
"live  wire"  insurance  agent. 

A  circular  came  to  my  attention  recently  announcing  the 
publication  of  a  book  on  "Character  Reading  at  a  Glance." 
It  is  to  be  presumed,  from  the  title,  that  one  would  be  fully 
equipped  to  solve  the  great  problem  of  all  time  when  the  author's 
opinions  had  been  thoroughly  digested. 

Securing  men  is  somewhat  similar  to  securing  business. 
It  is  almost  axiomatic  that  if  you  want  to  do  more  business  you 
must  see  more  people. 

The  agency  manager  who  has  through  years  of  experience 
learned  to  rely  on  his  judgment  as  being  at  least  one-third  good 
in  determining  a  man's  fitness  for  insurance  sales  work,  knows  it 
to  be  a  fact  that  many  men  possess  sales  ability  who  give  no 
indication  of  such  ability  even  on  an  extended  acquaintance. 
Ability,  therefore,  to  pick  men  is  not,  in  my  opinion,  to  be 
learned  from  books  but  from  experience.  What  others  have 
to  say  on  any  subject  is  most  valuable  as  a  guide  to  steer  one 
from  well-known  pitfalls ;  but  experience  as  a  pilot  is  only  secured 
by  applying  one's  self  to  practical  work. 

It  is  needless  to  say  that  the  agency  manager's  most  difficult 
task  is  to  keep  his  organization  to  full  capacity  with  one  hundred 
per  cent.  men.  Getting  business  is  solved  when  the  man  question 
is  answered. 

Since  results  of  administration  of  Home  Office  detail  — 
underwriting,  loss  payments,  etc., — are  largely  measured  by 
statistical  tabulations,  and  therefore  the  profit  and  loss  more 
readily  ascertained,  undue  prominence  is  credited  to  the  men  who 


109 

reap  success  in  these  lines  as  compared  with  the  agency  manager 
and  his  associates,  whose  ability  to  select  successful  men  and 
manage  them  cannot  be  measured  by  statistics,  and  consequently 
errors  in  judgment  are  enlarged.  Of  course,  the  results  of  good 
judgment  in  selecting  men  are  evidenced  in  the  results  pro- 
duced, an  increasing  volume  of  business. 

Many  agency  managers  become  supersensitive  on  the 
subject  of  recommending  new  material  and  lapse  into  the  easiest 
way  —  trying  out  most  any  good-looker  who  may  apply. 

There  are  some  more  or  less  obvious  characteristics  which 
might  be  given  consideration  in  this  paper.  I  will  not  mention 
negative  characteristics  lest  I  be  accused  of  preaching. 

Given  a  man  who  possesses  health,  is  ambitious  —  which 
presumes  that  he  is  industrious  —  combined  with  a  distinctive 
personality  even  to  the  point  of  being  eccentric,  and  withal 
somewhat  of  an  ideaHst,  and  I  am  willing  to  wait  many  months 
to  sign  him  up  on  a  commission  contract. 

How  to  secure  such  a  man  is  a  proper  question  to  discuss. 
There  is  no  better  way  than  to  be  ever  on  the  lookout  for  men 
in  all  lines  of  activities,  talk  of  the  possibiHties  of  service  and 
the  income  which  the  insurance  business  affords  to  every  clean- 
cut,  individualistic  man  you  meet.  Emphasize  the  opportunity 
for  service  that  insurance  work  offers,  to  gauge  the  mans  ideals; 
and  emphasize  the  income  derived,  to  gauge  his  industry  and 
ambition.  The  idealist  sees  possibilities  of  much  personal  satis- 
faction in  serving  his  fellow  man,  and  should  know  that  monetary 
reward  is  bound  to  come  in  proportion  to  his  honest,  industrious 
effort. 

I  am  not  aware  that  any  satisfactory  results  ever  accrued 
from  newspaper  or  magazine  advertising  for  agents;  nor  does 
the  circular  letter  arouse  any  real  interest  in  the  man  who  is 
reasonably  successful  in  his  present  employment,  or  have  any 
effect  upon  good  agents  whom  such  advertisements  and  circular 
letters  are  supposed  to  tempt. 

Next  to  advertising  and  circular  letters,  the  easiest  but 
most  unprofitable  way  to  secure  agency  material  is  the  well- 
worn  path  which  should  be  avoided,  namely :  To  see  the  leading 
minister,  whose  judgment  of  human  nature  is  too  often  warped 
by  his  desire  to  save  his  falling  brother  (I  was  introduced  to 
the  insurance  business  by  a  minister) ;  or  see  the  leading  doctor, 
who  is  often  more  concerned  in  helping  an  unfortunate  patient; 
or  see  the  leading  politician,  who  always  has  some  obligation  to 
pay  and  passes  up  some  hard  working,  perhaps,  but  disappointed 
henchman;  or  see  the  banker,  who  gauges  men  too  often  by  their 
monetary  credit,  discounting  even  the  moral  status  of  the  man; 
or  see  the  merchant  or  manufacturer,  who  is  in  sore  need  of 
good  salesmen  himself  and  is  apt  to  pass  you  some  "has-been" 
or  "never-was"  salesman,  assuming  as  too  many  do  that  the 


no 

insurance  business  can  work  miracles  in  producing  successes 
where  other  lines  have  failed. 

But  if  the  agency  manager  is  wise  he  will  pass  up  all  of 
these  threadbare  methods  and  proceed  to  solicit  business  from 
a  carefully  selected  list  of  successful  merchants,  manufacturers 
and  bankers,  in  the  expectation  that  some  one  or  more  of  the 
men  solicited  will  be  open  to  a  proposition  or  at  least  sufficiently 
interested,  on  hearing  of  the  benefits  to  be  derived  from  an 
insurance  policy,  that  he  will  recognize  the  sales  merits  and  the 
possibilities  for  making  money.  It  is  surprising  the  number  of 
men  occupying  seemingly  good  positions  who  are  ever  alert  for 
an  opportunity  to  improve  themselves.  The  agency  manager 
must  be  patient  and  guard  against  attempting  to  make  a  con- 
tract with  the  first  man  who  evidences  interest  in  his  proposition. 

This  straight  canvass  for  men,  incidentally  writing  some 
business,  should  be  continued  for  two  or  three  days  at  least, 
and  each  man  on  being  canvassed  for  insurance  should  be  asked 
the  question  if  he  would  be  interested  in  hearing  of  the  oppor- 
tunity which  the  given  company  has  to  offer  to  the  healthy, 
ambitions,  honest  salesman.  It  often  happens  that  such  methods 
arouse  interest  not  alone  on  the  part  of  the  particular  individual, 
but  he  immediately  mentally  canvasses  his  friends  and  is  often 
able  to  give  excellent  leads. 

At  the  end  of  this  period  of  soliciting  by  the  agency  manager 
he  should  have  lines  upon  anywhere  from  one  to  a  half  a  dozen 
successful  men  who  may  be  open  to  a  proposition.  Then  comes 
the  time  when  his  ability  to  size  up  sales  ability  in  his  respective 
candidates  is  put  to  the  test. 

I  know  some  managers  who  get  lines  upon  successful  business 
or  professional  men  and  wait  as  long  as  two  years  before  they 
are  able  to  make  a  contract. 

The  successful  agency  manager  is  aware  of  the  responsi- 
bility which  he  places  upon  his  own  shoulders  when  he  succeeds 
in  persuading  a  man  to  give  up  a  given  occupation  or  profession 
in  which  he  is  reasonably  successful,  to  take  up  the  uncertainties 
that  await  every  novice  who  enters  insurance  sales  work.  The 
manager  should,  therefore,  be  not  only  a  good  judge  of  men  but 
a  good  salesman. 

Aside  from  the  tendency  on  the  part  of  a  large  number 
of  agency  managers  to  experiment  with  any  reasonably  good- 
looking  man,  my  experience  prompts  the  conclusion  that  the 
great  waste  in  developing  an  agency  organization  is  not  so  much 
in  selection  as  in  the  training  and  developing  work  during  the 
first  few  months  of  the  new  salesman's  activities. 

In  developing  a  territory,  the  agency  manager  who  has  a 
direct  personal  commission  interest  in  the  business  is  likely  to 
be  handicapped  considerably  by  reason  of  his  desire  for  immediate 
profits  accruing  from  his  personal  activities;  and,  because  of 
this,  he  yields  to  the  temptation  to  secure  immediate  commissions 


Ill 

by  his  own  personal  efforts  and  leaves  his  agency  force  more  or 
less  to  grow  up  something  like  Topsy  —  with  the  corn ;  and  an 
agency  organization,  like  corn  and  children,  needs  careful  and 
persistent  cultivation  in  order  to  get  a  large  and  healthy  crop. 
Such  a  procedure,  personal  production,  sooner  or  later  finds  the 
agency  manager  up  against  caring  for  a  large  personal  account, 
which  is  detrimental  to  increasing  his  district's  production, 
which  must  have  undivided  and  unselfish  attention. 

When  an  agent  has  been  appointed  he  not  only  needs 
instruction  in  contract  forms,  but  he  needs  more  than  all  else 
co-operative  work  —  not  for  one  or  two  days  but  for  at  least  a 
week  —  and  frequent  coaching  during  his  first  three  months. 
Such  a  procedure,  it  is  true,  is  expensive,  but  in  the  long  run  it 
cuts  out  materially  the  awful  waste  due  to  leaving  a  man  alone 
to  suffer  the  discouragements  the  like  of  which  no  business 
imposes  as  does  soliciting  of  Life  and  Accident  insurance. 

Most  men  who  are  getting  their  first  experience  in  the 
insurance  business  have  been  for  a  number  of  years  working 
under  more  or  less  rigid  office  regulations,  and  have  had  work 
fed  to  them  by  a  superior,  or,  being  bosses  themselves,  have  had 
imposed  upon  them  the  necessities  of  keeping  others  busy,  and 
have  formed  the  habit  of  being  driven  during  the  working  hours 
of  the  day.  On  entering  the  life  of  the  insurance  agent  they  find 
that  they  are  no  longer  forced  to  do  anything.  No  whistle  to 
call  them  to  work  in  the  morning  nor  bell  to  stop  at  night.  They 
are  their  own  bosses,  and  the  open  air  is  the  only  limitation 
affecting  the  time  of  the  insurance  man.  As  a  consequence, 
he  is  very  apt  to  be  at  a  loss  for  something  to  do,  in  spite  of  the 
fact,  that,  like  the  shipwrecked  Mariner,  there  is  "water,  water 
everywhere,  and  not  a  drop  to  drink."  But  the  insurance  man's 
situation  is  somewhat  similar  to  the  crew  of  a  wrecked  sailing 
vessel  that  had  been  on  the  water  for  several  days  and,  their 
supply  of  drinking  water  becoming  exhausted,  one  or  two  of 
the  party  having  died,  one  of  the  men,  in  a  state  of  collapse, 
dipped  into  the  supposedly  salt  water  and  took  a  drink  of  what 
was  found  to  be  fresh  water.  They  were  later  picked  up  and 
found  that  they  were  within  a  few  miles  of  the  mouth  of  the 
Amazon  River,  which  poured  such  torrents  of  fresh  water  into 
the  salt  ocean  that  it  was  drinkable. 

Our  new  insurance  agent  has  to  learn  these  things  by  hard 
knocks.  He  needs  counsel,  advice  and,  more  than  all,  help, 
to  tide  him  over  the  experimental  period  which  is  the  cause  of 
so  many  failures. 

Since  the  agency  manager  has  assumed  the  responsibility 
of  taking  a  man  out  of  good  employment  —  and,  of  course,  it 
is  advisable  to  select  men  who  are  successful  —  he  should  be 
willing  to  back  up  his  judgment  by  a  sacrifice  of  time  and  per- 
sonal commissions  during  several  weeks  in  order  to  make  good 
his  judgment  and  assure  the  new  agent  of  permanent  success. 


112 

The  agency  manager  should  be  a  student  of  system  methods 
and  be  an  all-round  sales  efficiency  expert.  No  one  system 
can  be  applied  to  every  man  and  have  all  successful  in  the 
application  thereof,  although  a  few  of  the  leading  insurance 
agencies  of  the  country  long  ago  adopted  a  definite  system  and 
hold  their  men  rigidly  to  the  general  points  of  this  system. 

There  is  no  questioning  the  fact  that  an  agent  is  kept  busy 
and  contented,  two  requisites  for  success,  when  he  is  operating 
upon  a  definite  plan. 

Since  system  in  soliciting  is  vital  to  the  success  of  the 
agency  manager's  work,  a  discussion  of  system  is  not  out  of 
place  in  this  paper. 

Shooting  blindly  in  the  air  never  brought  down  many 
birds.  The  successful  huntsman  knows  how  and  when  to  shoot, 
and  he  has  a  definite  target  in  view  before  he  shoots.  He  goes 
where  birds  are  known  to  be,  employs  a  bird-dog  trained  to 
point  them,  and  success  in  getting  a  full  bag  depends  on  the 
choice  of  his  hunting  ground,  the  efficiency  of  his  dog,  and  his 
skill  as  a  shot. 

There  are  sportsmen  who  get  few  birds.  They  may  hunt 
in  good  country  and  have  a  good  auxiliary  in  the  shape  of  canine 
intelligence,  but  because  of  lack  of  proficiency  they  fail  to 
score  many  hits.  Per  contra,  a  sportsman  may  have  skill  and 
efficiency,  but  if  he  doesn't  go  where  the  birds  are  plentiful 
he  will  meet  with  meagre  success. 

If  a  man  takes  up  the  insurance  business  as  a  means  of 
getting  a  livelihood  and  is  ambitious  to  achieve  success  beyond 
the  mediocre,  it  is  assumed  that  he  puts  into  his  work  energy, 
enthusiasm  and  industry.  But  not  all  of  these  attributes  will 
bring  to  him  the  degree  of  success  he  is  after  unless  he  employs 
a  SYSTEM. 

Not  all  agents  would  be  successful  in  employing  the  same 
system.  Just  what  system  brings  the  best  results  can  only 
be  determined  by  a  trial.  The  same  general  lines  must  be 
employed  in  all  systems. 

Whatever  plan  is  adopted  must  include  the  following 
essentials :  — 

Adaptation  of  the  system  to  the  individual  —  first,  as  to 
time;    second,  as  to  accessibility. 

An  agent  working  in  a  metropolitan  locality  has  the  advan- 
tages in  both  particulars. 

To  illustrate:  —  Any  plan  must,  to  be  successful,  include 
a  definite  schedule  of  working  hours.  The  Agent  should  hold 
himself  to  regularity.  At  the  office,  8 :45  to  9 :15  a.  m. ;  soliciting, 
9:15  to  12:30  p.  m.;  lunch,  and  if  necessary  one-half  to  three- 
quarters  of  an  hour  in  his  office,  12:30  to  2:00  p.  m.;  soliciting, 
2:00  to  4:30  p.  m.;  office,  4:30  to  5:30  p.  m.  Whatever  the 
schedule,  adhere  to  it. 

Adaptation  of  system  to  community :  — 


113 

Arrange  men  (all  men  are  prospects)  into  class  of  business, 
professions,  manufacturing,  etc.  The  system  must  include 
a  card  file  which  at  first  classifies  the  community  in  groups;  — 

1.  Mercantile:     Proprietors,  Clerks. 

2.  Banking:     Officials,  Clerks. 

3.  Manufacturing:     Proprietors,   Officials,   Clerks,   Super- 

intendents, Foremen. 

4.  Professional:     Lawyers,    Architects,    Physicians,    Den- 

tists, Clerks  and  Office  Assistants. 

Any  up-to-date  city  directory  will  furnish  the  desired  names 
and  in  sufficient  quantity  and  quality  to  keep  a  "hustler"  going 
for  many  weeks.  In  the  larger  cities,  as  Boston,  New  York, 
Philadelphia,  Chicago,  in  fact  any  city  of  100,000  or  more,  it  is 
advisable  to  use  trade  and  professional  directories,  club  direc- 
tories, etc.,  any  one  or  all  of  which  may  be  secured  from  a  Public 
Library. 

Don't  try  to  complete  the  entire  list  from  a's  to  xyz's  in 
one  month.  Select  two  hundred  men  whose  place  of  business  is 
within  walking  distance  from  the  office.  Card  their  names  and 
place  in  a  card  index  file  by  street  and  number.  When  this  has 
been  done  the  mechanical  part  is  complete.  Not  less  than 
fifteen  men  should  be  seen  each  day  and  every  day  for  two  weeks. 
At  the  close  of  each  day  the  work  done  must  be  reviewed,  nota- 
tion being  made  on  cards  which  are  carried  for  ready  reference. 
It  is  surprising  how  a  card  bearing  a  man's  name  and  address 
will  help  in  soliciting  —  it  gives  you  a  definite  target  to  aim  at. 

Fifteen  calls  a  day,  twelve  working  days  —  total,  one 
hundred  eighty  men.  A  leading  representative  of  the  Company 
finds  that  one  man  in  thirty-two  is  waiting  for  an  insurance  man 
to  take  his  application,  and  that  one  man  in  twenty  will  buy 
accident  insurance  on  being  told  of  the  benefits  offered.  Stick 
to  your  schedule  and  you  should  have  better  than  jive  life  appli- 
cations and  nine  accident  applications.  "Too  many,"  you  say. 
Very  well,  cut  in  two.  Three  life  and  jive  accident  applications. 
Still  too  good  to  be  true?  Cut  again.  One  life  application  and 
a  good  prospect,  and  two  accident  applications  and  one  good 
prospect.  Net  results  in  commissions:  — 
One  life  application,  average  amount  $2,200. 
Policy,  20-payment,  premium  approximately  $50.00, 

Commission $22.00 

Two    accident,    average    premium    $20.00 -$40.00, 

Commission 10.00 

Total  Commission $32 .00 

Much?  Well,  no!  but  think  of  the  information  in  way  of 
"call  backs,"  leads  to  others,  etc.,  etc.,  all  of  which  is  immediately 
placed  in  the  card  system  —  prospects  in  order  of  date,  for  definite 
call  back  dates  should  be  secured. 


114 

The  above  summary  is  made  on  the  assumption  that  our 
Agent  is  not  yet  a  salesman. 

Beginning  with  the  third  week  real  sales  ability  develops, 
and  then  the  need  of  sticking  close  to  the  system.  The  amount 
of  new  business  which  should  be  produced  is  in  direct  ratio 
to  the  number  of  his  prospects  called  upon  —  that  is,  if  you 
want  more  business  see  more  people. 

Thorough  analysis  of  systematic  activity,  without  brilliant 
sales  ability,  discloses  the  following  interesting  facts :  — 

Fifteen  calls  produces  four  interviews  —  one  prospect. 

Thirty-two  calls  produces  nine  interviews  —  one  application. 

Continued  activity  along  definite  lines  produces  the  follow- 
ing results :  — 

To  be  sure  of  writing  business  each  day,  fifty  prospects  are 
required. 

One  application  a  week,  twenty-five  prospects. 

One  application  occasionally,  ten  prospects. 

Now  take  your  measure,  but  let  every  man  enlarge  his 
dimensions  by  becoming  a  student  of  his  business.  Proficiency 
as  an  insurance  salesman  is  not  measured  by  your  knowledge 
of  the  subject,  but  by  the  efficient  manner  in  which  you  impart 
that  knowledge  to  a  large  number  of  insurable  people. 

The  above  system  may  be  used  by  any  agent  but  it  is 
especially  adaptable  to  the  beginner,  who,  more  than  any  other 
man,  needs  to  follow  what  may  be  termed  "canvass"  work. 
A  few  months'  use  of  the  system  will  logically  lead  to  the  formu- 
lation of  a  new  method  somewhat  along  the  following  lines :  — 

From  specific  information  regarding  a  large  number  of 
people,  it  is  possible  to  select  anywhere  from  ten  to  one  hundred 
men,  all  of  whom  are  able  to  buy  a  $10,000  accident  policy,  or 
more,  and  at  least  $5,000  of  life  insurance.  Having  ''flushed 
the  covey"  and  improved  your  sales  ability,  you  will  be  able 
to  get  one  application  from  every  five  persons  whose  business, 
income  and  family  requirements  you  have  analyzed. 

The  card  file  should  be  continued  as  in  the  first  system 
outlined,  keeping  up  the  daily  review  which  is  the  most  valuable 
phase  of  any  system. 

One  profitable  phase  of  the  system  is  the  determination 
of  the  value  of  each  call.  One  record  of  thirty-two  hundred  calls, 
following  the  plans  of  the  first  system,  shows  a  value  of  $1.82  per 
call.  Another  record  of  twelve  hundred  calls,  following  the 
second  system,  shows  a  value  of  $5.10  per  call.  When  an  agent 
realizes  that  each  move  costs  time,  which  is  equal  in  his  case 
to  money,  he  learns  to  make  every  move  count. 

We  have  referred  to  the  daily  review.  This  review  should 
include  the  following  essentials :  — 


115 

(a)  Analysis  of  individual  calls;  classifying  each  for 
reasons  of  success  or  failure,  making  notations  on  the 
back  of  each  card. 

(b)  Arrangement  of  the  cards  for  future  reference. 

(c)  Review  of  the  entire  file  for  the  purpose  of  mapping 
out  work  for  the  next  day. 

(d)  Analyzing  present  policyholders  for  the  purpose  of 
determining  whether  more  insurance  could  be  placed, 
or  if  the  man  has  full  coverage  on  the  policy  which 
he  now  carries. 

(e)  Review  of  Company's  literature. 

(f)  Perfecting  sales  arguments. 

if  the  agent's  office  is  not  accessible  to  his  home,  it  may  be 
advisable  to  keep  the  card  records  at  home,  bringing  to  the 
office  each  day  only  those  cards  which  are  of  immediate  use  and 
value.  Not  more  than  one  hour  should  be  required  in  making 
this  review. 

Many  an  agent,  old  as  well  as  new,  has  often  missed  the 
opportunity  which  lay  right  at  his  door,  going  miles  away  from 
his  office  looking  for  prospects  when  there  were  an  unlimited 
number  within  a  block  of  his  office  and  many  times  in  the  same 
building.  In  every  large  city  there  are  buildings  patronized 
by  big  concerns  of  affiliated  interests,  or  full  of  men  in  the  same 
kind  of  business  but  employed  by  different  concerns,  furnishing 
a  fertile  field  which  if  properly  worked  would  keep  the  agent 
busy  doing  nothing  else.  We  have  in  mind  two  buildings  of 
this  kind,  one  located  in  New  York  and  the  other  in  Chicago, 
and  we  doubt  if  either  building  has  ever  been  systematically 
worked  by  a  solicitor  for  accident  insurance.  In  one  building 
there  are  more  than  2,000  men,  all  of  whom  are  good  subjects 
for  accident  insurance  and  by  reason  of  the  high  salaries  paid 
them,  would  be  eligible  for  good-sized  policies. 

It  is  easier  to  work  from  the  center  of  a  circle  out  than  to 
start  at  the  rim  and  work  toward  the  hub. 

The  agency  manager,  like  his  commission  agent,  desires 
to  cover  all  the  territory  at  once,  and  in  so  doing  he  loses  valuable 
time  and  is  apt  to  overlook  first-class  material.  His  task  is 
somewhat  like  that  of  the  boy  who  was  given  the  stunt  of  hoeing 
a  large  field  of  potatoes  before  given  Saturday  off  to  go  to  the 
circus.  Disappointed  and  discouraged  at  the  prospects,  he  was 
weeping  copious  tears  and  doing  the  best  he  could  at  hoeing, 
when  through  the  tears  he  saw  but  one  hill,  and  in  so  doing  he 
found  success.  By  hoeing  one  hill  at  a  time  and  concentrating 
upon  it  he  found  his  task  a  simple  one  and  earned  his  day  off. 
By  concentration  upon  one  city  or  town  in  a  district,  securing 
a  successful  agent  and  bringing  his  production  up  to  the  point  of 


116 

self -development,  attention  can  be  given  to  some  other  point 
in  the  territory. 

An  agency  manager  cannot  successfully  develop  more  than 
three  new  agents  at  a  time  and  give  necessary  attention  to  other 
matters  that  are  constantly  forced  upon  him.  So,  with  the 
agency  manager  as  with  the  commission  agent,  concentration 
and  perseverance  are  requisite  to  success. 

Developing  a  territory  along  lines  which  will  prove  per- 
manent costs  money,  especially  during  the  formative  period; 
but,  if  the  work  is  well  done  the  agency  manager  will  in  a  few 
years  find  himself  in  the  comfortable  position  of  watching  the 
other  fellow  produce  for  him;  and  it  is  certainly  by  far  better 
to  have  twenty  pairs  of  hands  turning  over  a  reasonable  volume 
of  business  than  one  pair  producing  a  large  business  which  of 
necessity  will  impose  limitations  both  as  to  time  and  effort  and 
will  ultimately  preclude  the  possibility  of  developing  any  satis- 
factory agency  organization. 

There  is  no  room  these  days  for  the  short-sighted  agency 
manager.  Neither  the  companies  nor  the  public  will  now  stand 
for  the  sharp  practices  of  the  old-time  general  agent  that  have 
stamped  indelibly  upon  the  business  the  reputation  which  has 
done  much  to  place  the  insurance  business  and  men  engaged 
in  it  among  the  undesirable  vocations.  Properly  conducted, 
there  is  no  line  of  work  which  will  pay  greater  dividends  for  the 
time  and  effort  expended,  nor  greater  satisfaction  to  a  larger 
number  of  people,  than  that  of  a  well  organized  corps  of  indus- 
trious insurance  men. 


Co-of)eration 

BY 

R.  A.  PERSON 

TKe  Hartford  AcciJent  and  Indemnity  ComJ)any 


MARCH  12.  1915 


Co-operation  is  defined  as  concurrent''  effort  or  labor,  or 
a  person  acting  jointly  with  another  for  a  definite  object.  In 
all  phases  of  society  we  find  a  growing  appreciation  of  the  ad- 
vantages, the  saving  in  time  and  effort  and  other  beneficial 
results  of  Co-operation. 

The  great  difference  between  civilized  and  uncivilized 
people  is  largely  their  ability  to  co-operate,  to  help  one  another, 
to  agree  to  abide  by  laws  made  for  the  common  good  of  all.  The 
Preamble  of  the  Constitution  of  the  United  States  breathes  a 
spirit  of  Co-operation. 

In  military  tactics  Co-operation  is  essential,  for  all  success- 
ful wars  of  history  have  had  to  some  degree  a  basic  co-operative 
plan.  We  read  of  the  artillery  supporting  the  infantry,  enabling 
it  to  advance  or  hold  groimd,  which  would  otherwise  oe  impos- 
sible, of  the  shifting  of  the  line  to  brace  a  weak  spot  and  of  the 
bringing  up  of  reinforcements  at  the  right  time. 

In  nearly  every  kind  of  sport  the  need  of  united  effort  is 
absolutely  necessary.  The  successful  football  or  baseball  team 
is  primarily  one  whose  individual  players  understand  the  value 
of  co-operation  or  co-ordination.  A  crew  would  be  demoralized 
without  it. 

There  is  no  better  illustration  of  co-operative  results  than 
a  happy  family.  There  particularly  different  individuals  perform 
different  functions,  each  supplementing  the  other,  for  a  definite 
purpose  and  for  mutual  advancement. 

It  has  been  in  a  comparatively  recent  period  that  Co-oper- 
ation in  business  has  been  fully  recognized  as  a  most  valuable 
asset.  The  formation  of  combinations,  united  capital,  organi- 
zations of  men  in  a  given  line  for  mutual  benefit,  labor  unions, 
and  most  recently  profit  sharing  are  the  result. 

Now  what  is  good  for  the  world,  for  society  and  for  business 
as  a  whole  is  good  for  the  smaller  units  and  for  the  individual 
and  this  spirit  of  co-operation  with  its  "pull  together,  boys," 
is  one  of  the  finest  upbuilding  factors  within  the  doors  of  a  busi- 
ness house. 


118 

If  the  relations  of  the  members  of  the  clerical  force,  for 
instance,  are  governed  by  a  desire  to  help  each  other  to  a  more 
efficient  and  proficient  transaction  of  daily  duties,  the  desire 
will  find  countless  opportunities  for  expression,  the  Company 
will  be  benefited,  details  will  be  handled  in  a  more  businesslike 
manner  and  each  one  will  feel  a  righteous  satisfaction  in  helping 
himself,  the  other  fellow,  and  in  bettering  the  organization. 
No  man's  work  is  entirely  an  individual  effort.  A  mistake  may 
affect  one  to  a  dozen  other  people.  A  little  thought  on  the  point 
of  the  connection  of  one's  work  with  that  of  another  will  lead  to 
a  more  intelligent  handling  of  the  duties  at  hand. 

The  relation  of  departments  is  most  important  if  general 
efficiency  is  to  be  perfected.  There  should  be  a  perfect  under- 
standing between  them,  each  should  know  where  its  duties  end 
and  the  other's  begin,  what  to  expect  of  the  other  and  what  the 
other  expects  of  it. 

It  is  not  always  possible  to  have  one's  own  way.  Sometimes 
the  most  essential  thing  is  to  yield  to  the  other  fellow  and  to  do 
it  smilingly.  Two  horses  harnessed  as  a  team  must  pull  at  the 
same  time,  must  co-operate,  or  their  effort  is  largely  wasted. 
Just  so  can  the  time  and  labor  of  the  members  of  the  home  office 
staff  be  wasted  if  they  are  working  to  cross  purposes.  This 
is  true  in  a  thousand  ways  of  matters  small  in  themselves. 

A  great  deal  of  valuable  time  may  be  lost  early  in  the  day 
if  the  mail  has  not  been  properly  handled  and  is  delayed  in  reach- 
ing the  desks  of  those  who  attend  to  it.  Procrastination  in  filing, 
which  requires  a  search  before  correspondence  can  be  produced, 
may  cause  much  inconvenience.  Lack  of  judgment  in  handling 
countless  subjects  and  in  recognizing  the  natural  sequence  of 
different  duties  may  be  a  source  of  annoyance  to  others.  We 
are  all  familiar  with  the  clerk  who  allows  an  important  matter 
to  lie  upon  his  desk  while  he  devotes  his  time  to  less  essential 
things.  Then  there  is  the  clerk,  a  rare  specimen,  of  whom  it 
is  hardly  necessary  to  speak  here,  who  seems  to  delight  in  doing 
his  work  with  unnecessary  deliberation,  thereby  holding  up  the 
next  man.  His  perspective  is  warped  and  his  case  will  be  hope- 
less if  he  doesn't  watch  out.  The  efficient  handling  of  papers  from 
department  to  department  may  lead  to  an  important  decision 
for  an  agency  or  the  settlement  of  a  claim  twenty-four  or  forty- 
eight  hours  earlier  than  otherwise. 

Speed  and  thoroughness  in  handling  applications  by  index, 
filing  and  other  clerks  help  the  underwriting  and  the  corre- 
spondence. They  in  turn  assist  in  attending  to  reinsurance  and 
collection  questions,  in  fact,  all  departmental  work  must  dove- 
tail. 

The  relations  of  the  superior  and  subordiante  should  be 
based  upon  confidence  and  a  desire  to  assist  each  other,  for  they 


119 

can  materially  help  each  other  in  perfecting  an  organization. 
The  private  in  the  ranks  often  does  not  realize  how  much  effi- 
ciency in  the  performance  of  his  duties  may  aid  the  department 
head  or  executive  officer  in  disposing  of  larger  matters  and  the 
department  head  or  executive  officer  sometimes  does  not  appre- 
ciate how  much  a  word  of  encouragement  may  increase  that 
efficiency. 

For  the  entire  office  force,  a  smile;  a  helping  hand,  respect 
for  the  needs  and  rights  of  others,  co-operation,  are  necessary 
adjuncts  to  brains  in  building  a  well  rotmded  structure. 

Certainly  no  less  important  is  the  connection  between  the 
home  office  and  the  agency  force.  A  full  understanding  is  more 
difficult  for  the  reason  that  the  personal  element  is  more  in  the 
background.  It  is  easier  to  pass  a  matter  without  full  consider- 
ation when  writing  to  a  man  than  if  he  is  at  one's  elbow. 

There  is  always  the  tendency  in  the  home  office  to  view 
matters  from  a  technical  standpoint,  while  the  agent  some- 
times expects  more  consideration  than  the  particular  subject 
demands.  A  happy  medium  is  proper  as  a  rule,  and  it  is  a  help- 
ful thing  to  know  both  view  points.  I  sometimes  wish  that  every 
man  in  the  home  office  could  spend  a  year  in  the  field  and  get 
the  agent's  outlook,  see  his  problems  and  feel  his  disappoint- 
ments. He  would  develop  a  broader  ability,  a  better  under- 
standing and  a  more  sympathetic  treatment  of  agency  matters. 
It  must  never  be  forgotten  that  the  agent  is  the  producer  and 
that  he  does  not  relish  too  arbitrary  instructions  regarding 
ordinary  matters  from  the  home  office. 

Right  here,  and  particularly  with  reference  to  letter  writing, 
is  one  of  the  most  important  phases  of  "co-operative"  effort. 
Nothing  so  disturbs  an  agent  as  to  receive  a  letter  which  is  un- 
reasonable, incomplete  or  too  technical,  for  there  is  not  the 
saving  grace  of  the  personality  of  the  writer,  as  would  be  the 
case  in  an  interview.  A  letter  is  a  cold  proposition  and  often 
leads  to  a  troublesome  misunderstanding  which  requires  time 
to  efface.  There  is  no  better  method  in  letter  writing  than  in 
putting  oneself  in  the  place  of  the  recipient  while  dictating.  A 
choice  of  words  may  give  satisfaction  rather  than  offense  without 
affecting  the  strength  or  meaning  of  a  statement.  An  agent  may 
be  encouraged  or  discouraged  by  the  letters  he  receives  from 
the  home  office. 

Intelligent  and  reasonable  demands  should  be  made  of 
him  with  consideration  of  the  conditions  under  which  he  must 
respond.  There  are  many  rules  that  may  be  broken,  or  at  least 
badly  bent,  on  occasions.  No  two  cases  are  just  alike  in  all 
respects,  and  judgment  is  required  that  peculiar  circumstances 
may  be  considered. 


120 

I  recall  a  letter  which  I  saw  some  years  ago  asking  for  a 
statement  from  an  applicant.  It  was  a  statement  which  was 
unimportant,  and  the  correspondence  at  hand  should  have  made 
clear  that  the  agent  would  be  compelled  to  travel  several  miles 
into  the  country  to  secure  it.  In  reply  the  agent  asked  the 
natural  question,  "Does  the  Company  expect  me  to  use  $10.00 
worth  of  time  to  do  a  ten  cent  job?"  Now  there  is  the  other 
side  to  this  question.  Nothing  is  more  aggravating  to  the  home 
office  than  to  be  required  to  write  constantly  to  a  field  man  for 
information  which  should  have  been  forwarded  in  ordinary 
course.  This  applies  to  all  departments  and  one  considerable 
item  of  expense  is  due  to  unnecessary  correspondence.  Co-op- 
eration between  the  home  office  and  the  agency  force  on  all 
questions  will  lead  to  harmony,  efficiency,  greater  production 
and  profit. 

It  is  recognized  in  the  accident  business  that  co-opera- 
tion between  the  underwriting  and  claims  departments  leads 
to  better  service  to  policyholders,  protects  the  Company  from 
undesirable  risks  and  aids  the  agents'  production.  Nothing 
helps  our  business  more  than  satisfied  policyholders,  and  when- 
ever claim  adjustments  can  assist  the  agency  work,  it  is  desirable, 
legitimate  and  should  be  taken  full  advantage  of.  The  agent  has 
a  very  vital  interest  in  his  policyholder.  To  a  great  degree  the 
business  is  his  business  and  the  adjuster  should  not  antagonize 
his  interests  when  it  can  be  avoided. 

The  home  office  naturally  analyzes  the  qualifications  of 
its  field  men  and  wherever  possible  rely,  as  far  as  it  may  be  reason- 
able and  sound,  upon  their  judgment  in  underwriting  and  claim 
questions.  A  mediocre  producer  is  sometimes  made  into  a 
world  beater  by  this  method. 

"Co-operation"  between  companies  is  a  broad  and  com- 
plex question,  too  complex,  doubtless,  to  more  than  touch  upon. 
The  extension  of  benefits  has  gone  the  limit  and  possibly  be- 
yond in  some  instances.  What  united  effort  may  do  to  modify 
this  situation  is  speculative.  There  is  no  doubt,  however,  as 
to  the  value  of  a  united  experience,  for  the  aggregate  loss  ratio 
and  experience  as  to  coverage,  ages,  classes,  occupational  haz- 
ard, etc.,  of  all  companies  obtained  through  a  clearing  house 
like  the  new  Bureau  of  Personal  Accident  and  Health  Under- 
writers, will  be  of  great  service.  The  fraternal  attitude  of  the 
older  toward  the  newer  companies  is  a  recognition  of  the  value 
of  "co-operation"  as  well  as  a  manifestation  of  good-fellowship. 

I  am  sure  this  Institute  illustrates  better  than  anything 
else  the  value  of  co-operative  effort.  It  is  performing  a  great 
service  and  its  influence  is  far  reaching.  It  is  doing  its  share 
in  maintaining  the  wonderful  prestige  Hartford  enjoys  in  the 
Insurance  world. 


Health  Insurance 

BY 

McL.  C.  WILSON.  M  D. 

Tne  Travelers  Insurance  Comfjany 


MARCH  19.  1915 


The  first  attempts  to  write  Health  insurance  in  the  United 
States  were  made  during  the  period  from  1840-1850.  Several 
companies  were  organized  for  this  purpose,  the  first  being  the 
Massachusetts  Health  Insurance  Company  of  Boston,  (April 
21,  1847).  Then  followed  several  others,  viz:  Health  Insurance 
Com^pany  of  Philadelphia,  Spring  Garden  Health  Insurance 
Company  of  Philadelphia  County,  Eagle  Life  &  Health  Insurance 
Comipany  of  Jersey  City  and  the  Essex  County  Insurance  Com- 
pany of  Massachusetts. 

Starting  with  the  formation  of  these  companies,  the  period 
from  that  time  up  to  about  1897  can  be  regarded  as  the  first 
period  of  Health  insurance  in  the  United  States.  This  was  a 
period  characterized  by  failures.  Those  engaged  in  the  work 
were  not  trained  insurance  men;  the  financial  backing  was  in- 
sufficient; and  the  only  experience  they  had  to  go  by  was  that 
of  the  English  Friendly  societies,  which  show,  with  a  fair  degree 
of  accuracy,  the  number  of  weeks  of  genuine  sickness  and  the 
actual  sickness  in  England  among  the  middle  and  industrial 
classes  at  the  different  ages.  The  cost  of  conducting  these  com- 
panies and  the  claim  payments  that  did  not  represent  genuine 
sickness  had  to  be  learned  by  experience.  The  result  was  fail- 
ure. Not  one  of  these  companies  survived  nor  did  they  furnish 
any  experience  in  regard  to  rate  of  sickness  that  could  be  con- 
sidered of  value. 

The  second  period  of  Health  insurance  in  the  United  States 
dates  from  1898,  when  this  branch  was  taken  up  by  the  stock 
Accident  companies.  The  Fidelity  &  Casualty  of  New  York 
is  credited  with  being  the  first  stock  Accident  company  to  issue 
a  Health  policy.  This  policy  was  issued  in  connection  with  the 
Accident  policy  and  was  what  might  be  termed  a  special  Health. 
It  paid  weekly  indemnity  in  case  of  disability  as  the  result  of 
contracting  any  one  of  a  certain  limited  number  of  specified 
diseases,  viz:  typhus,  typhoid,  scarlet,  smallpox,  varioloid, 
diphtheria,  measles,  Asiatic  cholera,  erysipelas,  appendicitis, 
diabetes,  peritonitis,  bronchitis,  pleurisy  and  pneumonia.  The 
period  for  which  disability  could  be  claimed  was  for  not  less  than 
one  week  and  not  exceeding  twenty-six  consecutive  weeks. 


122 

The  new  departure  of  the  FideHty  &  Casualty  in  the  line 
of  Health  insurance  was  soon  followed  by  several  of  the  stock 
Accident  companies.  The  Travelers  and  the  ^tna  in  March, 
1899  placed  upon  the  market  two  Health  contracts,  one  a  spe- 
cial Health,  following  closely  the  contract  of  the  Fidelity  & 
Casualty,  and  the  other  a  general  Health  policy,  furnishing  in- 
demnity for  temporary  total  disability,  caused  by  all  diseases, 
except  consumption  or  tubercular  disease  in  any  form,  venereal 
disease,  insanity,  or  diseases  resulting,  directly  or  indirectly, 
from  the  use  of  intoxicating  liquors  or  narcotics.  This  contract 
was  issued  from  the  Home  Office  to  select  and  preferred  risks, 
residing  in  towns  of,  at  least,  five  thousand  population.  The 
annual  premium  for  indemnity  at  the  rate  of  $5.00  per  week, 
limited  to  fifty-two  weeks,  at  least  seven  days  of  illness  being 
required,  was  based  on  a  step  rate  schedule  according  to  age, 
ages  twenty  to  twenty-nine  $8.00,  and  then  increased  yearly 
to  age  fifty  when  the  annual  premium  was  $20.00.  These  rates 
were  based  upon  the  experience  of  the  English  Friendly  Societies 
as  regards  the  probable  amount  of  genuine  sickness  and  then  a 
certain  percentage  was  added  to  cover  expenses  and  sham 
sickness.  This  policy  required  a  medical  examination  which, 
together  with  the  step  rate  premiums,  made  it  unpopular  and 
comparatively  few  were  sold. 

With  reference  to  the  special  Health  policy,  the  Travelers 
commenced  issuing  this  Contract  in  March,  1899.  Its  sale  was 
good  and  the  experience  on  it  was  fairly  satisfactory.  In  1901  it 
was  found  advisable  to  make  a  few  changes  as  to  the  diseases 
covered  owing  to  the  fact  that  some  of  these  diseases  displayed 
characteristic  symptoms  which  were  also  common  to  other  con- 
ditions and  could  be  interpreted  in  many  ways.  At  the  same 
time  the  coverage  was  extended  to  cover  cerebral  apoplexy, 
epilepsy,  brain  fever,  hydrophobia,  sunstroke  and  mumps. 
In  1903  the  policy  was  still  further  extended  to  cover  cholera 
morbus,  angina  pectoris,  yellow  fever,  tetanus,  whooping  cough, 
acute  hydrocele,  cancer  and  acute  cerebro-spinal  meningitis. 

Early  in  1903  the  general  Health  policy  was  also  changed  to 
cover  all  diseases  except  rheumatism,  tuberculosis  and  insanity, 
no  medical  examination  being  required.  A  flat  premium  of  $7.00 
was  made  for  ages  eighteen  to  fifty  for  $5.00  weekly  indemnity 
and  $9.00  for  ages  fifty-one  to  sixty.  Also,  in  addition  to  the 
benefits  already  granted  in  the  policy,  the  payment  of  certain 
specified  sums  for  certain  surgical  operations  was  incorporated 
according  to  a  schedule.  In  April,  1903,  the  exceptions  as  to 
tuberculosis,  rheumatism  and  insanity  were  eliminated  from  the 
contract. 

From  this  time  on  to  1908  there  was  little  change  with  the 
exception  of  some  changes  back  and  forth  regarding  age  and 
weekly  indemnity  limits.  In  1908  the  clause  limiting  disability 
to  at  least  seven  days  or  over  was  eliminated  and  a  clause  added, 


123 

providing  a  payment  for  hospital  charges.  From  then  to  the 
present  time  there  have  been  few  changes  of  importance  as  to 
the  poHcy  coverage  and  rates.  Certain  policies  of  Health  in- 
surance have  recently  been  issued  which  do  not  require  that  the 
Insured  be  confined  to  the  house,  although  he  must  be  totally 
and  continuously  disabled.  Another  form  also  includes  a  life 
indemnity  feature,  but  it  must  be  remembered  that  these  fea- 
tures are  not  a  part  of  the  contract,  but  an  addition  extended  at 
an  added  cost. 

In  brief,  the  best  Health  contract,  which  is  in  general  use 
by  all  companies,  gives  the  following  coverage: 

Temporary  Disability.  For  a  period  of  continuous  total 
disability  during  which  the  Insured  shall  independently  of  all 
other  causes  be  necessarily  confined  to  the  house  and  be  wholly 
prevented  b}"  bodily  disease  from  performing  any  duty  of  his 
occupation  a  weekly  indemnity  is  payable.  If,  following  such 
total  disability,  he  shall  not  be  confined  to  the  house,  but  is 
totally  disabled,  one-half  the  full  weekly  indemnity  will  be  paid. 
No  payment  is  made  for  any  disability,  resulting  from  disease 
which  has  not  required  the  services  of  a  physician,  nor  from 
disease,  beginning  within  fifteen  days  from  noon  of  the  date  of 
issue,  nor  for  disability  in  excess  of  fifty-two  consecutive  weeks. 

Permanent  Disability.  If  the  Insured  shall  contract  any 
disease  which  shall  not  result  in  death,  but  which  shall  result  in 
the  entire  and  irrecoverable  loss  of  the  sight  of  both  eyes  or  in 
the  loss  of  the  use  of  both  hands  or  both  feet  or  one  hand  and  one 
foot  and  shall  be  wholly  disabled  from  engaging  in  any  work  or 
occupation  for  wages  or  profit,  the  Company  will  pay  in  lieu 
of  any  further  indemnity  during  the  period  of  such  total  dis- 
ability, but  not  exceeding  fifty-two  weeks  from  the  commence- 
ment, a  weekly  indemnity  at  the  rate  prescribed  for  total  dis- 
ability and  confinement  to  the  house.  At  the  expiration  of 
fifty-two  weeks  the  Company  will  pay,  together  with  any  indem- 
nity paid  for  the  disease,  which  shall  have  caused  such  disabil- 
ity, a  sum  of  $ or  the  equal  of  one  hundred  weeks. 

Hospital  Charges  will  be  paid  in  addition  to  the  weekly 
indemnity  and  amounting  not  in  excess  of  fifty  per  cent,  of  the 
weekly  indemnity  provided  in  the  policy,  providing  no  claim  is 
made  for  surgical  benefits  or  for  a  period  of  more  than  ten  weeks. 

Surgical  Benefits  are  paid  according  to  the  schedule  of 
operations,  if  such  procedure  occurs  within  ninety  days  from  the 
date  of  the  commencement  of  the  disability. 

The  policy  requires  that  notice  of  illness  be  given  within  ten 
days  after  the  commencement  of  disability  or  sufficient  evidence 
to  show  that  the  notice  was  given  as  soon  as  was  reasonably 
possible.  Affirmative  proof  of  loss  must  be  furnished  to  the 
Company  within  ninety  days  after  the  termination  of  the  period 


124 

of  disability.  The  Company  shall  have  the  right  and  opportunity 
to  examine  the  person  of  the  Insured  when  and  so  often  as  it  may 
be  reasonably  required  during  the  pendency  of  the  claim.  The 
Company  may  cancel  a  policy  at  any  time  by  written  notice, 
delivered  to  the  Insured  or  mailed  to  his  last  address,  as  shown 
by  the  records  of  the  Company,  together  with  cash  or  the  Com- 
pany's check  for  the  unearned  portions  of  premiums  actually 
paid  by  the  Insured'.  This  policy  does  not  cover  disease  con- 
tracted or  disability  sustained  in  the  Tropics  or  in  any  part  of 
Alaska  or  the  British  possessions  in  America,  north  of  the  six- 
tieth degree,  North  Latitude,  nor  shall  it  cover  disability  by 
disease  while  engaged  in  military  or  naval  service. 

The  Health  policy  is  issued  on  an  application  setting  forth 
certain  statements  of  facts  as  desired  by  the  Company.  The 
falsity  of  any  statement  bars  the  right  to  recover,  if  such  state- 
ment is  made  with  the  intent  to  deceive  or  materially  affects  either 
the  acceptance  of  the  risk  or  the  hazard  assumed  by  the  Com- 
pany. Briefly,  the  application  calls  for  the  following  information: 
Form  of  policy,  weekly  indemnity,  classification,  premium,  full 
name,  date  and  place  of  birth,  color,  height  and  weight,  residence, 
occupation  and  duties  thereof,  insurance  history  as  to  Life, 
Accident  or  Health,  that  the  weekly  indemnity  applied  for, 
together  with  other  insurance  against  sickness,  does  not  exceed 
the  average  weekly  earnings,  history  of  any  indemnity  received 
for  injury  or  illness,  contemplation  of  any  special  journey  or 
hazardous  undertaking,  whether  there  has  been  any  recent  expo- 
sure to  infectious  diseases,  that  he  is  in  sound  condition,  mentally 
and  physically,  that  his  habits  are  temperate,  that  he  is  not 
deformed  and  does  not  suffer  any  impairment  of  sight  or  hearing, 
followed  by  a  list  of  diseases,  some  of  which,  that  are  usually 
called  for,  are  hernia,  epilepsy,  vertigo,  diabetes,  syphilis,  tuber- 
culosis, et  cetera,  and  medical  history  during  past  five  years, 
stating  date,  nature  of  disability  and  duration  and  whether  any 
surgical  operation  has  been  necessary,  giving  date,  for  what 
condition  and  result. 

The  underwriting  of  a  Health  risk  does  not  materially  differ 
from  the  Accident  risk  which  was  thoroughly  set  forth  in  a 
previous  article.  Medically,  the  risk  must  be  carefully  scruti- 
nized. The  m^edical  history  of  an  applicant  is  the  basis  for  his 
acceptance  or  declination.  This  information  is  obtained  through 
the  answers  to  warranties  in  the  application,  the  statements 
of  the  agent,  the  attending  physician,  reporting  agencies  or  on 
physical  examination.  As  far  as  possible  the  aim  is  to  select 
risks  that  are  in  normal  physical  condition.  Certain  diseases 
are  apt  to  be  recurrent  in  nature,  some  of  which  may  result  in 
a  permanent  organic  disease,  while  in  others  the  condition, 
causing  a  disability,  is  merely  a  symptom  or  manifestation  of  a 
seriously  diseased  condition.  Age,  height,  weight,  residence  and 
occupation  must  be  weighed  with  the  history. 


125 

To  illustrate  —  Diseases  of  a  recurrent  nature  are  investi- 
gated as  to  the  number,  duration  and  dates  of  such  attacks,  e.  g., 
tonsilitis,  rheumatism,  appendicitis,  gall  stones  or  kidney  stones, 
malaria  and  neurasthenia.  Of  the  first  two  named,  two  or  more 
attacks,  coming  at  short  intervals,  indicate  susceptibility  and 
some  companies  may  find  it  necessary  to  eliminate  such  diseases 
from  the  policy.  Appendicitis,  gall  stones  and  kidney  stones 
predispose  so  strongly  to  subsequent  attacks  that  a  history  of 
such  precludes  the  acceptance  or,  if  taken,  calls  for  a  waiver, 
unless  the  condition  was  very  remote  and  the  diagnosis  doubtful. 
Malaria  brings  up  the  question  of  residence.  If  it  is  in  a  malarial 
district,  recurrence  is  almost  the  rule.  If  the  district  is  non- 
malarial,  greater  latitude  is  given,  especially,  if  it  was  the  first 
attack.  Neurasthenia  is  a  broad  term,  covering  a  multitude  of 
various  nervous  manifestations.  Such  a  history  usually  calls 
for  declination,  unless  the  disability  has  been  very  short.  Ner- 
vous breakdowns  or  disability  from  overwork  are  the  most  fre- 
quent types.  Recurrence  is  frequent  and,  fundamentally,  these 
cases  have  an  unstable  nervous  system  and  react  poorly  to  their 
environment.  Some  diseases  may  result  in  permanent  organic 
disease.  Syphilis,  years  after  the  primary  infection,  may  show 
itself  as  locomotor  ataxia,  paresis,  et  cetera,  an  ulcer  of  the 
stomach  become  the  seat  of  a  cancer  or  urethral  stricture  result 
in  prostatic  hypertrophy  and  infections  of  the  genito-urinary 
tract.  Serious  disease  may  manifest  itself  merely  as  a  symptom 
and  produce  but  little  disability.  For  example,  frequent  head- 
aches may  mean  nephritis;  carbuncles,  diabetes;  asthma,  heart 
disease;  indigestion,  appendicitis  and  gastric  or  duodenal  ulcer. 

Extremics  of  height  and  weight  probably  will  show  a  low 
resistance  and,  if  taken,  their  personal  and  family  history  is 
investigated.  Claim  records  are  carefully  considered.  The  in- 
dividual who  puts  in  frequent  claims  for  minor  disabilities  is 
an  unprofitable  risk.  Thus,  it  is  apparent  that  the  selection 
of  a  Health  risk  is  not  simple. 

Health  claims  in  general  follow  a  more  or  less  uniform  pro- 
cedure. Most  of  the  companies  require,  when  a  notice  is  re- 
ceived during  the  period  of  disability,  a  medical  examination 
by  one  of  its  regularly  appointed  medical  examiners  who  makes 
his  report,  not  only  giving  the  diagnosis  and  prognosis  of  the 
illness,  but  an  estimate  of  the  period  of  disability  with  such  other 
remarks  as  are  beneficial  to  the  consideration  of  the  claim  and 
underwriting.  With  this  in  hand,  the  adjuster  is  prepared  to 
furnish  a  final  claim  blank  which  gives  the  claimant's  statement 
as  to  period  of  disability  and  includes  a  certificate  by  the  attend- 
ing physician.  On  receiving  this,  the  adjuster  has  a  file,  con- 
taining notice,  examiner's  report  and  completed  claim,  which 
enables  him  to  measure  the  merits  of  the  case.  In  addition  to 
the  medical  examiner's  report  and  the  completed  claim,  an  in- 
vestigation may  be  made,  but  there  can  be  no  fixed  time  for 


126 

this  investigation,  in  that  each  case  by  its  facts  must  be  handled 
and  governed  accordingly.  For  example,  if  a  claim  is  not  re- 
ceived at  the  end  of  the  estimated  period  given  by  the  examiner, 
an  investigation  should  be  made,  unless  reliable  information 
is  at  hand,  explaining  the  delay.  At  times  an  investigation  will 
be  required  before  the  end  of  the  estimated  period  of  disability. 
At  other  times,  after  the  claim  is  received,  the  facts  shown  by 
the  different  reports  will  not  sufficiently  correspond  to  satisfy 
the  adjuster  and  an  investigation  is  required. 

In  speaking  of  investigations  it  must  be  understood  that 
they  are  almost  without  exception  made  by  a  layman  and  the 
object  sought  is  to  determine  the  facts  of  disability,  which,  in 
connection  with  a  claim  under  the  Health  policy,  consists  of 
absence  from  business,  a  period  of  confinement  to  the  house 
and  a  period  of  non-confinement  to  the  house.  Occasionally, 
the  investigator  is  required  to  interview  the  attending  physi- 
cian in  order  to  satisfy  himself  that  the  illness  is  of  such  a  nature 
as  to  cause  the  Insured  to  remain  away  from  his  occupation  or 
because  the  dates  of  disability  given  by  the  claimant  do  not 
agree  with  those  of  his  physician.  It  is  also  occasionally  neces- 
sary for  an  investigator  to  visit  an  insured  for  the  purpose  of 
explaining  the  coverage  of  the  Health  policy. 

It  is  the  intent  of  the  policy  to  give  full  weekly  indemnity 
while  the  insured  is  confined  to  the  house  by  an  illness.  The  non- 
confinement  period  is  for  his  convalescense,  for  which  one-half 
of  the  weekly  indemnity  is  usually  paid.  These  periods  must 
necessarily  be  consistent  with  the  nature  of  the  illness.  The  above 
information  and  facts  taken  collectively  make  possible  the  ad- 
justment of  claims  with  fair  degree  of  accuracy. 

Conditions  affecting  public  health  have  a  direct  bearing  on 
Health  insurance  and  it  is  probable  that  the  lack  of  knowledge 
of  the  communicability  of  disease  and  the  inefficiency  of  or 
absence  of  competent  health  service  had  a  very  great  bearing 
on  the  early  failures.  Since  that  time  scientific  investigation 
and  development  of  the  municipal  state  and  national  health 
service  has  somewhat  simplified  the  writing  of  Health  insurance. 
Bacterial  diseases  are  preventable.  The  non-bacterial  group 
are  to  a  lesser  degree  preventable,  but  may  be  postponed  by 
proper  regulation  of  the  mode  of  life  and  by  treatment.  Pre- 
vention of  disease  is  the  goal  toward  which  the  medical  pro- 
fession is  working  and  length  of  life  and  freedom  from  disease 
are  increasing  wherever  sanitary  science  and  preventative  medi- 
cine is  applied.  This  gain  in  the  lengthening  and  strengthen- 
ing of  life  can  be  secured  through  medical  investigation  and 
practice,  school  and  factory  hygiene,  restriction  of  labor  of 
women  and  children,  the  education  of  the  public  in  both  public 
and  private  hygiene  and  the  improvement  of  the  efficiency  of 
our  municipal,  state  and  national  health  service. 


127 

The  death  rate  from  communicable  diseases  has  decreased 
nearly  fifty  per  cent,  in  thirty  years.  This  has  been  brought 
about  by  the  work  of  scientific  investigators  and  the  public  health 
service.  Education  of  the  public  is  the  important  factor,  for  it 
is  only  with  their  co-operation  that  proper  preventative  measures 
can  be  successfully  carried  out. 

Research  and  study  along  the  line  of  preventative  medicine 
has  developed  the  sera  and  vaccines  which  have  robbed  many 
of  our  most  dreaded  diseases  of  their  terrors.  The  first  important 
discovery  was  a  vaccine  against  smallpox,  the  wide-spread  use 
of  which  has  practically  eliminated  the  disease  from  civiliza- 
tion. Next  in  importance  came  antitoxin,  which  has  reduced 
the  mortality  from  diptheria  from  30  to  50  per  cent,  to  about  5 
per  cent,  and  prophylactic  doses  given  to  those  who  have  been 
exposed  have  saved  numbers  from  contracting  the  disease.  The 
more  recent  discovery  of  a  vaccine  against  typhoid  has  more  than 
proved  its  efficiency  by  the  results  as  shown  in  the  army. 

On  the  other  hand  a  large  number  of  the  non-bacterial 
diseases  to  a  great  extent  have  the  present  day  mode  and  manner 
of  living  as  a  basic  cause.  Environment,  work,  play,  rest  and 
diet  are  the  factors.  Diseases  of  the  heart,  blood  vessels  and 
kidneys  are  on  the  increase,  because  of  the  lack  of  balance  neces- 
sitated by  business  competition,  the  search  for  physical  ease 
and  social  world. 

The  present  movement  for  the  conservation  of  life  is  be- 
coming wide-spread  and  will  necessarily  result  in  a  healthier 
people,  and  therefore,  a  decrease  in  the  rate  of  sickness. 


Accident  Statistics  and  Reserves 


BY 

E.  S.  FALLOW 

Tne  Travelers  Insurance  Company 


MARCH  26.  1915 


Accident  Insurance  coverage  can  be  divided  into  four 
general  divisions. 

1.  Commercial  Accident  Insurance.  This  form  con- 
stitutes the  bulk  of  the  Accident  Insurance  business  and  is 
sold  to  merchants,  professional  men,  clerks  and  other  people 
engaged  in  the  ordinary  walks  of  life.  The  premium  varies 
according  to  the  occupation  and  is  payable  annually,  semi- 
annually or  quarterly. 

2.  Industrial  Accident  Insurance.  As  its  name  im- 
plies, this  form  of  accident  insurance  coverage  is  sold  to  risks 
engaged  in  industrial  occupations  such  as  paper  mill,  cotton 
mill  or  railroad  employees.  The  premium  for  this  class  of  pro- 
tection is  payable  monthly. 

3.  Ticket  Accident  Insurance.  This  is  a  form  of 
coverage  written  at  a  certain  rate  per  day  for  persons  intending 
to  go  upon  a  journey. 

4.  The  fourth  form  is  Workmen's  Collective  Insurance, 
the  premium  and  benefits  for  which  are  based  upon  the  pay- 
roll expended  by  the  insured.  It  indemnifies  the  insured  for 
any  pa3rments  he  may  make  to  persons  injured  while  in  his 
employ. 

This  paper  will  deal  particularly  with  Commercial  Accident 
Insurance. 

The  best  forms  of  contracts  issued  in  commercial  lines  at 
the  present  time  provide  approximately  the  following  benefits: 

1.  In  case  of  accidental  death  the  principal  amount  of 
insurance. 

2.  In  case  of  dismemberment  or  loss  of  sight  the  principal 
sum  or  some  part  of  the  same. 

3.  Weekly  indemnity  for  total  and  partial  disability. 
The  former  is  paid  where  the  insured  is  totally  disabled  and 
the  latter  where  he  is  only  able  to  perform  a  part  of  his  duties. 
The  insured,  if  he  so  elects,  may  take  in  lieu  of  the  weekly  in- 
demnity a  payment  in  a  lump  sum  known  as  the  Elective  Benefit. 


129 

4.  Surgical  Benefits  and  Hospital  Fees.  The  Surgi- 
cal Benefits  are  payable  in  case  an  operation  is  performed  on 
account  of  an  injury  covered  by  the  policy.  This  benefit  is 
payable  in  addition  to  any  other  indemnity  to  which  the  in- 
sured may  be  entitled.  The  Hospital  Fees  are  payable  in  case 
an  injury  causes  the  insured  to  be  taken  to  a  hospital  for  treat- 
ment. 

5.  The  contracts  also  provide  a  Double  Indemnity  Feature 
in  which  case  certain  payments  are  to  be  doubled  if  the  injuries 
are  sustained  while  riding  as  a  passenger  in  or  on  a  public  convey- 
ance or  while  in  a  passenger  elevator,  etc.  The  beneficiary 
under  the  contract  is  also  covered  by  insurance  which  provides 
certain  payments  in  case  of  injuries  mentioned  under  the  double 
indemnity  feature  of  the  contract. 

6.  An  Accumulation  Feature  which  provides  for  an  in- 
crease of  10%  on  the  original  face  value  of  the  contract  for  each 
year's  renewal.  This  increase  is  added  to  the  contract  until 
total  accumulations  of  50%  of  the  original  face  value  of  the 
contract   have   been  reached. 

For  rating  purposes,  risks 'in  Accident  Insurance  are  divided 
into  several  classes,  according  to  the  hazard  of  the  occupation, 
such  as  Preferred,  Ordinary,  Medium,  etc.,  —  the  premium  start- 
ing at  $5.00  for  $1,000  accidental  death  insurance  and  $5.00 
weekly  indemnity  in  the  Preferred  Class  and  grading  up  to  $30 
for  the  same  amount  of  insurance  in  the  Extra  Special  Hazardous 
Class.  With  this  rough  explanation  of  the  policy  coverage  and 
rates  we  can  now  turn  to  the  question  of  statistics. 

STATISTICS. 

It  is  the  work  of  the  Statistical  Department  of  an  accident 
insurance  company  to  analyze  carefully  the  company's  business. 
Of  course  the  company's  accounting  records  will  show  in  a  general 
way  whether  money  is  being  made  or  lost,  but  the  Statistical 
Department  must  be  able  to  point  out  clearly  the  causes  of  a 
good  or  bad  showing.  Some  of  the  information  which  should 
be  disclosed  is  as  follows: 

1.  Is  the  company  making  money  on  its  business  and 
what  are  the  favorable  lines  of  development? 

2.  Which  occupations  show  a  profit  and  which  show  a  loss? 

3.  What  does  the  experience  show  in  regard  to  the  various 
forms  with  their  varying  policy  features?  As  new  policy  con- 
tracts are  being  continually  put  on  the  market,  this  record  should 
be  kept  so  as  to  show  as  soon  as  possible  the  results  on  the  various 
forms  of  contracts. 

4.  What  class  of  risks  are  profitable  and  in  which  is  the  loss 
ratio  unfavorable? 

5.  Do  the  men  at  the  younger  ages  constitute  the  better 
class  of  risks  or  do  the  middle  aged  men  show  the  better  results  ? 


130 

These  are  a  few  of  the  profitable  lines  of  inquiry.  There  are 
many  others  such  as  experience  by  size  of  contract,  by  location 
of  risk,  etc.  Accuracy  in  the  work  of  the  Statistical  Department 
is  important  as  the  results  obtained  determine  to  a  large  extent 
the  decisions  of  the  underwriters.  The  latter  must  depend  upon 
the  accuracy  of  the  figures  furnished  and  guide  themselves  ac- 
cordingly in  their  decisions. 

There  are  two  systems  of  keeping  experience,  one  being  the 
Written  Card  System  and  the  other  the  Punched  Card  System. 
Provided  there  is  a  sufficiently  large  number  of  cards  to  be 
handled  there  is  no  doubt  but  that  the  Punched  Card  System 
is  much  more  advantageous  than  the  Written  Card  System. 
Because  of  this  fact  the  Punched  Card  System  has  been  generally 
accepted  as  more  satisfactory  and  this  scheme  of  experience 
will  be  outlined  here. 

The  card  used  in  operating  this  system  may  be  explained 
as  follows:  There  are  ten  (10)  horizontal  "rows"  of  numerals 
from  0  to  9,  inclusive,  arranged  in  vertical  lines  which  may  be 
called  "columns."  These  columns  are  grouped  by  solid  vertical 
lines  forming  "fields."  These  fields  are  of  two  (2)  classes,  the 
topical  field  record  consisting  of  registration  data  such  as  age, 
state  residence,  etc,  while  the  adding  field  is  for  amounts  which 
are  later  to  be  tabulated.  The  mechanical  operation  of  the 
system  consists  in  sorting  and  grouping  the  cards  according  to 
topical  fields  and  then  tabulating  the  amounts  in  the  adding 
fields.  For  purposes  of  visual  classification  the  use  is  made  of 
various  colored  cards. 

The  unit  experience  card  or  "policy"  card  can  be  prepared 
much  more  quickly  on  the  punched  card  basis  than  on  the  written 
card  basis.  From  500  to  1,500  cards  can  be  punched  in  one  day, 
depending  upon  the  amount  of  information  to  be  punched  and 
the  number  of  codes  to  be  used.  Further,  the  cards  can  be  sorted 
at  the  rate  of  about  250  per  minute  and  tabulated  at  the  rate 
of  approximately  150  per  minute.  All  that  is  necessary  after 
sorting  the  cards  is  to  place  them  in  the  tabulating  machine 
and  results  can  be  quickly  obtained,  whereas  written  cards  must 
be  added  on  an  adding  machine  with  much  more  labor  and  ex- 
pense. When  the  cards  are  once  prepared,  they  can  be  sorted  and 
resorted  and  tabulated  much  more  quickly  than  can  the  cards 
on  the  written  basis.  The  punched  card  system  makes  possible 
analyses  of  the  business,  which  were  previously  not  to  be  thought 
of,  first,  on  account  of  the  expense  involved  and,  second,  be- 
cause of  the  fact  that  under  no  circumstances  could  the  ex- 
perience be  completed  in  time  to  be  of  value. 

The  handling  of  the  applications  and  the  punching  of  a 
unit  experience  card  which  we  will  call  the  "policy"  card  is  the 
first  step  in  compiling  accident  experience.  The  information 
to-be  shown  on  this  card  is  as  follows: 


131 

1.  The  Policy  Year  —  the  experience  should  be  collated 
on  what  is  called  the  policy  year  basis.  The  calendar  year  basis 
in  which  the  claims  paid  during  a  certain  year  are  charged 
against  the  premiums  collected  during  that  year  may  be  a  rough 
guide  to  the  tendency  of  the  business,  but  to  allocate  the  loss  pay- 
ments against  the  years  in  which  the  premiums  were  actually 
received  (the  polic}^  year  plan)  is  necessary  in  order  to  obtain 
reliable  results.  Experience  subdivided  in  this  way  shows  the 
actual  conditions  and  changes  in  the  business  from  year  to  year. 
The  policy  year  in  accident  experience  differs  somewhat  from 
the  life  experience  policy  year.  In  life  insurance  the  claim 
pa3nnents  are  allocated  to  the  actual  policy  year  in  which  the 
contract  was  running  when  death  occurred.  Example :  Consider 
a  life  contract  issued  in  June,  1914,  where  the  Insured  died  in 
February,  1915.  This  contract  would  be  charged  to  the  1914 
policy  year,  which  in  this  case  would  cover  the  exposure  from 
June,  1914,  to  June,  1915.  Next  consider  an  accident  contract 
dated  November,  1914,  payable  quarterly,  with  the  November 
1914  and  February  1915  premiums  paid.  If  the  injury  occurred 
in  March  1915  the  loss  would  be  charged  against  the  1915  policy 
year,  as  the  premium  covering  the  time  during  which  the  loss 
occurred  was  paid  in  1915.  This  system  in  accident  experience 
of  assigning  losses  to  the  actual  calendar  year  in  which  the  pre- 
mium was  collected  is  sufficiently  accurate  for  all  purposes. 

2.  The  Occupation.  The  occupation  in  accident  experi- 
ence is  very  important  as  it  is  this  feature  of  the  risk  which  deter- 
mines the  amount  of  the  premium  that  is  to  be  charged.  A 
large  part  of  accident  underwriting  is  based  upon  the  occupation 
hazard,  and  the  underwriter  .jfnust  keep  in  close  touch  with  this 
division  of  the  experience.  A  controversy  may  arise  with  an 
agent  in  the  field  who  thinks  that  the  rate  charged  for  some 
particular  occupation  is  too  high.  By  referring  to  the  experience 
the  underwriter  can  inform  him  that  the  experience  shows  that 
the  rate  charged  for  the  particular  occupation  is  proper  to  cover 
the  risk.  Then  again  if  the  experience  under  an  occupation 
shows  that  the  premium  charged  is  too  small  the  risks  in  this 
particular  occupation  can  be  placed  in  a  more  hazardous  class. 

3.  The  Class  Rating,  as  for  instance,  Select,  Preferred, 
etc.  This  item,  because  of  lack  of  space,  is  combined  with  the 
form  of  contract.  In  this  manner  the  experience  on  the  best 
form  of  contract  sold  to  Preferred  risks  may  be  obtained  as  dis- 
tinguished from  the  experience  on  the  same  contract  sold  to 
Ordinary  risks. 

4.  The  Age  of  the  Insured.  Although  accident  insurance 
is  sold  at  all  ages,  up  to  a  certain  limit,  for  the  same  premium 
the  experience  should  be  tabulated  with  reference  to  age  to 
show  the  indications  along  this  line.  For  this  reason  a  close 
watch  should  be  kept  on  the  experience  and  the  age  determined 


132 

at  which  a  company  writes  insurance  at  a  loss.  The  risks  in  the 
younger  ages  are  of  course  more  active  than  those  in  the  older 
ones  and  consequently  more  exposed  to  accident.  On  the  other 
hand  the  risks  in  the  older  ages,  although  meeting  with  fewer  ac- 
cidents will  undoubtedly  require  a  longer  time  to  recover  than 
do  the  younger  men. 

5.  The  State  Residence  of  the  Insured.  From  this 
the  experience  for  different  sections  of  the  country  may  be  ob- 
tained which  may  give  interesting  indications.  If  the  results, 
in  any  particular  state  or  section  appear  unfavorable,  further 
sub-divisions  can  be  made  to  determine  the  cause  of  this  show- 
ing. The  cards  could  be  sorted  to  class,  sub-divided  to  occupa- 
tion and  age.  Having  gone  thus  far  undoubtedly  the  results 
would  show  just  how  and  where  the  changes  in  the  underwriting 
should  be  made. 

6.  The  Term  of  the  Contract.  The  term  of  the  con- 
tract and  the  basis  of  exposure  of  the  pure  or  net  premium  is 
one  year.  Provided  the  exposure  is  large  enough  to  obtain  re- 
liable results,  one  can  tell  the  number  of  deaths  to  expect  among 
a  given  number  of  men  engaged  in  a  certain  occupation  over 
a  given  period.  One  would  also  be  enabled  to  estimate  the  number 
of  weeks  of  total  and  partial  disability  to  expect  from  this  group. 

7.  The  Amount  of  Insurance.  From  this  item  the  ex- 
perience by  size  of  contract  can  be  produced  which  will  act  as 
a  guide  in  a  great  many  questions  of  underwriting.  If  the  ex- 
perience under  some  particular  class  or  occupation  has  been 
bad,  because  of  claims  under  large  contracts,  an  investi- 
gation could  be  undertaken  to  learn  if  an  unusual  number  of 
said  large  policies  w^ere  exposed."  This  experience  is  very  im- 
portant at  the  present  time  because  of  the  development  of  the 
automobile  hazard  to  which  the  majority  of  policyholders  pos- 
sessing large  sized  contracts  are  exposed. 

8.  The  Premium.  A  great  many  times  all  that  the  under- 
writer requires  in  his  preliminary  investigation  in  regard  to  a 
particular  occupation  is  the  amount  of  premium  received  and  the 
amount  of  losses  paid.  These  items  are  often  sufficient  to  enable 
him  to  come  to  a  decision  in  the  question  at  issue. 

9.  The  remaining  items  to  be  listed  on  the  policy 'card  are 
the  amount  of  accumulation,  the  amount  of  weekly  indemnity, 
the  branch  office  through  which  the  risk  was  written,  whether 
the  policyholder  is  a  male  or  a  female  and  whether  the  business 
is  new  or  old.  There  is  probably  no  good  reason  to  suspect  that 
accident  experience  under  female  wage  earners  should  show 
worse  results  than  that  under  male  lives  but  investigation 
should  be  made  to  learn  the  facts.  As  there  is  a  slight  selection 
against  the  company  when  an  accident  contract  is  written  it 
is  undoubtedly  wise  to  keep  the  experience  under  contracts 


133 

running  in  the  first  year  separate  from  that  on  contracts  running 
in  the  second  and  subsequent  years. 

The  punching  of  the  claim  cards  is  the  second  step  in  compil- 
ing accident  experience.  The  card  should  contain  the  same  ana- 
lytical information  as  the  policy  card  previously  mentioned.  In 
addition  there  should  be* 'fields"  provided  for  the  following  items: 

1.  Death  Payment. 

2.  Dismemberment  or  loss  of  sight  payment. 

3.  Period  of  total  disability. 

4.  Amount  of  total  disability  payment. 

5.  Period  of  partial  disability. 

6.  i^  mount  of  partial  disability  payment. 

7.  Elective  Benefit  payments. 

8.  Surgical  Benefits  or  Hospital  Fees. 

9.  Information  showing  whether  the  accident  occurred 
while  the  insured  was  at  or  away  from  his  occupation.  This 
feature  of  the  experience  is  very  important  as  it  enables  one 
to  determine  just  how  much  of  the  hazard  under  a  particular 
class  or  occupation  is  occupational  and  how  much  is  non- 
occupational. 

10.  Nature  of  the  accident. 

11.  Nature  of  the  injury. 

The  last  two  items  may  be  explained  somewhat  more 
fully  as  follows :  The  nature  of  the  accident  discloses  in  what 
manner  the  accident  happened.  This  is  very  important  as  it 
will  show  to  just  what  extent  the  various  causes  of  accident 
contribute  to  the  total  cost  of  coverage.  It  may  be  found  upon 
investigation  that  in  certain  occupations  the  occupational  acci- 
dents are  caused  very  largely  in  the  same  manner.  Some  of 
the  causes  of  injury  which  might  be  listed  under  the  nature  of 
accident  code  are  as  follows : 

1.  About  stores  or  salesrooms. 

2.  Hit  by  flying  or  falling  objects. 

3.  Handling,  lifting  or  carrying. 

4.  Falls  from  buildings.  • 

5.  Falls  from  ladders. 

The  code  for  accidents  occuring  away  from  occupation 
should  show  at  least  the  following  causes  of  accidents: 

1.  At  Home. 

2.  Automobile. 

3.  Horse  and  Vehicle. 

4.  Pedestrian. 

5.  Sports  and  Recreation. 

6.  Assaults. 

7.  Elevator. 

8.  Firearms. 

9.  Railroad  Travel. 

10.  Street  Car  Travel. 

11.  Steamboat  Travel. 


134 

The  last  three  items  with  proper  sub -division  will  enable  a 
company  to  keep  a  close  watch  on  certain  features  of  the  cost 
of  the  Double  Indemnity  feature. 

The  nature  of  injury  experience  is  that  which  classes  the 
losses  according  to  the  kind  of  injury.  This  feature  in  the 
experience  is  valuable  for  obtaining  the  amounts  that  can  be 
offered  under  the  elective  benefit  feature.  Some  of  the  items 
which  should  be  listed  under  the  nature  of  injury  code  are  as 
follows : 

1.  Fractures. 

2.  Sprains. 

3.  Cuts. 

4.  Lacerations. 

5.  Dislocations. 

6.  Bruises. 

7.  Contusions. 

8.  Burns  and  scalds. 

From  the  nature  of  accident  and  the  nature  of  injury  experi- 
ence taken  in  conjunction  with  certain  experiences  previously 
mentioned  one  can  tell  just  about  how  long  a  claimant  aged 
forty  should  be  totally  disabled  provided  he  had  received  his 
injury  from  suddenly  stepping  into  a  hole  in  the  ground  and 
wrenching  his  ankle. 

The  investigations  which  have  been  mentioned  are  some 
of  the  many  which  may  be  obtained  without  great  labor  by 
means  of  the  punched  card  system.  The  results  obtained 
should  be  brought  forward  at  frequent  intervals  to  secondary 
or  intermediate  cards  and  the  summaries  obtained  typewritten 
in  loose  leaf  books  suitable  for  containing  a  large  amount  of  ex- 
perience. These  books  are  handy  for  reference  in  the  many 
questions  which  may  arise  in  accident  underwriting. 

Let  us  now  turn  to  the  question  of  reserves  under  an  acci- 
dent contract. 

RESERVES.. 

There  are  two  (2)  reserves  which  an  Accident  Insurance 
Company  must  carry,  first,  the  Unearned  Premium  or  "Reinsur- 
ance" Reserve,  and  second,  the  reserve  for  Outstanding  Claims. 

The  Unearned  Premium  Reserve  consists  of  that  part  of 
the  gross  premiums  in  force,  at  the  time  of  valuation,  which  are 
unearned.  The  method  usually  employed  in  calculating  this 
item  consists  in  taking  50%  of  the  gross  premiums  of  contracts 
which  are  to  run  over  a  period  of  twelve  (12)  months  or  less. 
The  idea  behind  this  method  of  calculation  is  that  the  premium 
income  is  evenly  distributed  throughout  the  year  and  that  con- 
sequently the  contracts  will  have  been  in  force  six  (6)  months, 
on  the  average  at  the  time  of  valuation.  There  is  another  method 
of  computing  the  Unearned  Premiums  which  is  known  as  the 
"Monthly  Pro  Rata"  method.  This  consists  in  dividing  the  pre- 


135 

miums  according  to  the  month  of  expiry  and  considering  as  the 
unearned  portion  the  amounts  which  will  carry  the  contracts 
from  date  of  valuation  to  the  middle  of  the  respective  months 
of  expiry.  In  compiling  the  reserve  on  this  basis  care  should  be 
taken  to  place  3,  6  and  12  months'  contracts  each  in  a  separate 
division.  As  computed  on  the  gross  premiums  there  is  consid- 
erable equity  in  the  Unearned  Premium  Reserve,  probably 
about  10%,  because  of  the  fact  that  the  commissions  and  other 
management  expense  items  are  paid  when  the  business  is  written. 
The  second  reserve  of  an  Accident  Insurance  Company  is 
that  for  Outstanding  Losses.  This  consists  of  a  combination 
of  several  items  as  follows : 

(1)  Unpaid  Drafts.  This  consists  of  those  cases  in 
which  the  draft  has  been  issued,  but  not  cashed. 

(2)  The  second  and  largest  item  in  the  Loss  Reserve  is 
that  for  notices  of  Accidents  received.  All  notices  from  which  a 
claim  is  liable  to  develop  should  be  reserved  for.  An  examina- 
tion of  the  Company's  previous  experience  will  tell  just  how  long 
the  period  is  in  which  a  notice  of  accident  may  develop  into  a 
claim.  The  average  number  of  weeks  indemnity  to  be  reserved 
against  each  notice  can  be  obtained  by  finding  from  past  ex- 
perience the  average  period  of  indemnity  paid  under  the  notices. 
The  total  amount  of  weekly  indemnity  under  those  notices 
coming  within  the  period  during  which  notices  may  develop 
into  claims  will  be  the  first  step  in  obtaining  the  notice  reserve 
and  from  this  amount  there  should  be  deducted  the  amount 
paid  on  this  group  of  notices.  An  additional  estimated  amount 
should  be  set  aside  for  the  notices  which  are  in  transit  at  the 
date  of  valuation. 

(3)  The  Long  Term  Claims,  which  are  being  paid  under 
notices  received  prior  to  the  live  notice  period  should  be  esti- 
mated individually  and  an  amount  set  aside  which  will  carry 
the  claim  payments  to  completion.  The  estimate  on  these  Long 
Term  Claims  should  be  made  by  some  one  who  is  thoroughly 
familiar  with  claim  adjustments.  In  the  case  of  risks  which 
have  become  totally  and  permanently  disabled,  where  the  con- 
tract pays  indemnity  for  life,  the  yearly  indemnity  payable 
should  be  multiplied  by  the  mean  annuity  based  upon  a  table 
of  lives  which  are  totally  and  permanently  disabled. 

(4)  Those  indemnity  claims  which  are  without  merit 
should  also  be  estimated  and  an  amount  reserved  for  the  prob- 
able expense  of  settlement. 

(5)  The  amount  to  be  reserved  under  Death  and  Dis- 
memberment notices  is  the  amount  for  which  the  claim  file 
indicates  the  Company  is  liable.  Those  Death  and  Dismen- 
berment  cases  which  are  without  merit  should  be  carefully 
considered  and  an  estimate  made  as  to  the  probable  expense  of 
settlement. 


136 

(6)  The  last  item  in  the  loss  reserves  is  that  for  Adjust- 
ment Expenses.  This  should  be  a  percentage  of  the  total  of 
the  reserve  items  just  outlined,  and  the  proper  percentage  to 
be  used  is  that  which  the  Company's  experience  shows  has  been 
previously  paid  in  adjusting  claims. 

The  reserves  for  outstanding  losses  which  have  been  out- 
lined are  not  required  by  the  statutes  of  Connecticut  but  the 
above  system  has  been  approved  by  the  Insurance  Department 
as  producing  results  which  are  entirely  adequate. 


Tke  Conduct  of  Suits  Under 
Insurance  Policies 


BY 

HOWARD  P.  DUNHAM 

./4/tna  Liiie  Insurance  Comt)any 


JULY  2.  1915 


INTRODUCTORY. 

Insurance  companies  are  not  immune  from  the  courts  and 
while  most  of  them  intend  to  Hve  up  to  the  letter  of  their  policy 
contracts  with  their  insured  there  are  occasions  when  claim- 
ants are  not  satisfied  with  the  interpretation  of  the  policies 
under  which  they  make  demands,  disputes  arise  and  into  the 
courts   they   go. 

Considering  the  vast  amount  of  business  written  and  claims 
paid  by  insurance  companies  in  this  country  the  number  of 
suits  against  them  has  been  very  small.  Eventually,  however, 
the  day  comes  when  the  companies  have  their  day  in  court  and 
it  is  in  explanation  of  the  trouble  of  this  kind  that  this  paper 
deals.  To  those  familiar  with  the  handling  of  suits,  what  I  say 
will  appear  very  elementary  but  there  are  some  here  who  know 
nothing  whatever  about  this  subject  and  my  object  is  to  portray 
to  them  as  simply  as  I  am  able  some  of  the  important  details 
connected  with  a  suit  against  an  insurance  company. 

DEFINITION   OF  SUIT. 

An  action  at  law  or  a  law  suit  is  a  very  comprehensive  term 
and  according  to  the  authorities  applies  to  any  proceeding  in  a 
court  of  justice  by  which  an  individual  pursues  that  remedy 
which  the  law  affords  him. 

WHO  MAY  BRING  SUIT. 

Any  person  who  has  an  interest  in  a  policy  of  insurance 
may  sue  upon  it  if  he  believes  he  has  a  valid  claim  against  the 
company  issuing  it.  In  suits  under  a  life  policy  or  under  death 
benefit  features  of  an  accident  policy  this  person  is  usually  the 
beneficiary  named  in  the  policy.  Under  all  other  classes  of 
policies  it  is  generally  the  insured  or  his  estate  who  brings  the 
action.  Where  an  assignment  of  interest  has  been  made  the 
suit  must,  of  course,  be  brought  in  the  name  of  the  assignee. 


138 


PARTIES  TO  THE  ACTION. 


The  party  who  brings  the  suit  is  called  the  plaintiff  and 
the  insurance  company  is  called  the  defendant.  The  plaintiff 
must  be  of  legal  capacity  to  sue,  that  is  he  must  be  over  21  years 
of  age  and  of  sound  mind.  The  suit  of  an  infant  must  be  brought 
in  that  person's  name  by  his  guardian  or  next  friend.  For 
persons  of  unsound  mind  a  trustee,  committee,  or  next  friend 
is  appointed  to  bring  the  action.  When  an  action  is  brought  by 
an  estate  the  suit  may  be  instituted  by  the  executor  or  admini- 
strator of  the  estate,  the  executor  if  the  insured  left  a  will  and 
the  administrator  if  no  will  was  made. 

THE  SUMMONS. 

In  order  to  bring  suit  a  summons  must  first  be  procured 
from  the  proper  official.  The  summons  is  a  written  instru- 
ment commanding  the  sheriff  or  other  authorized  person  to 
notify  the  insurance  company  to  appear  in  a  certain  court  to 
answer  a  complaint  on  a  specified  day.  The  laws  of  the  various 
states  stipulate  how  the  summons  may  be  served  on  the  company. 
When  a  suit  is  brought  against  a  company  in  the  state  where  it 
has  its  home  office  the  summons  may  be  served  on  one  of  the 
executive  officers  of  the  company.  If,  however,  the  suit  is 
brought  outside  the  state  where  the  company  has  its  home 
office,  as  for  instance  in  New  York  where  the  company  is  located 
in  Connecticut,  a  different  proposition  arises  for  the  reason  that 
the  company  in  that  case  becomes  what  is  known  as  a  foreign 
insurance  company  and  is  amenable  to  the  laws  of  the  state 
governing  foreign  insurance  corporations.  The  statutes  of 
most  of  the  states  prescribe  that  the  summons  on  an  insurance 
company  of  another  state  may  be  served  on  the  head  of  the 
state  insurance  department,  although  some  provide  that  service 
may  be  made  on  an  agent  of  the  company  located  in  the  state. 
These  latter  laws  which  allow  service  on  an  agent  are  manifestly 
unfair  and  oftentimes  work  great  hardships  on  the  companies, 
for  service  may  be  made  at  any  time  on  an  agent  who  perhaps 
does  not  know  the  intricasies  of  law  and  through  carelessness, 
ignorance  or  some  other  reason,  may  not  forward  the  summons 
to  the  company  or  may  send  it  along  too  late  for  the  company 
to  give  it  proper  attention.  The  result  is  that  a  judgment  by 
default  is  taken  from  which  the  company  cannot  appeal,  and 
of  course  has  to  pay. 

When  a  summons  is  served  on  the  head  of  a  state  insurance 
department  or  an  agent  of  the  company  it  is  sent  direct  to  the 
home  office  of  the  company  for  attention.  Some  state  insurance 
departments  use  standard  form  notices  for  sending  the  summons 
to  the  home  office  of  a  company.  The  New  York  department 
uses  a  form  such  as  the  following  for  the  purpose :  — 


139 

ATTORNEY  CIRCULAR. 

STATE  OF  NEW  YORK. 

Insurance  Department 

State  of  New  York, 

Supreme  Court,  County  of  Onondaga 

John  M.  Laird,  Plaintiff 
against 

Insurance  Company,  Defendant 

Sir:  —  Pursuant  to  the  requirements  of  section 
thirty-five  of  the  Insurance  Law,  you  are  hereby  notified 
that  summons  and  complaint  in  the  above  entitled  action 
has  this  day  been  served  upon  me,  a  copy  of  which  is 
herewith  inclosed.  Please  acknowledge  its  receipt  by 
return  mail. 
,  Dated,  Albany,  N.  Y.,  May  23,  1915 
Respectfully  yours, 


Superintendent  of  Insurance. 

To  the  Secretary  of  the ..Insurance  Co. 

of 

This  letter  was  registered  at  the  Albany 
Post  Office  on  May  23,  1915,  at  2  p.  m. 
by  Wilburt  E.  Clark. 

The  following  is  a  form  of  Summons  used  in  New  York 
State.  Other  states  have  different  forms  but  it  will  give  you  a 
general  idea  of  what  a  summons  really  is: 

SUMMONS. 

STATE  OF  NEW  YORK. 

SUPREME  COURT,  COUNTY  OF  ONONDAGA. 

John   M.  Liard,  Plaintiff 

vs. 

Insurance  Company,  Defendant 

You  are  hereby  summoned  to  answer  the  complaint 
in  this  action,  and  to  serve  a  copy  of  your  answer  on  the 
plaintiffs  attorney  within  twenty  days  after  the  service 
of  this  summons,  exclusive  of  the  day  of  service,  and  in 
case  of  your  failure  to  appear  or  answer,  judgment  will 
be  taken  against  you  by  default  for  the  relief  demanded 
in  the  complaint. 

Trial  to  be  held  in  the  County  of  Onondaga,  dated 
this  23rd  day  of  May  1915. 

TAFT   &  ROOSEVELT, 

Plaintiffs  Attorneys^ 
Office  and  Post  Office  Address, 

23  Berry   Block, 
Syracuse,^  N.   Y. 


140 


THE  PLEADINGS. 


The  pleadings  are  the  written  allegations  or  assertions  of 
the  plaintiff  and  the  defendant  for  the  purpose  of  definitely  pre- 
senting the  issue  to  be  tried.  The  purpose  of  the  pleadings  is 
to  inform  the  court  and  the  parties  of  the  facts  in  issue.  The 
object  of  all  pleadings  is  to  reach  an  issue.  An  issue  is  a  prop- 
osition asserted  by  one  side  and  denied  by  the  other.  The  first 
pleading  is  what  is  known  as  the  declaration,  in  some  states 
called  the  petition  and  in  still  others  the  complaint.  We  will 
refer  to  the  term  as  the  petition. 

THE  PETITION. 

The  petition  is  a  plain  and  brief  statement  of  the  plaintiff's 
cause  of  action.     It  is  generally  made  up  of  seven  parts,  viz.: 

1.  The  caption  which  contains  the  name  of  the  court. 

2.  The  title  which  contains  the  names  of  the  parties. 

3.  The  statements  of  compliance  with  the  conditions  of 
the  policy. 

4.  The  allegations  of  facts  complained  of  describing  a 
prima-facie  case  against  the  company. 

5.  The  demand  for  judgment. 

6.  The  signature  by  either  plaintiff  or  the  attorney. 

7.  Verification  of  the  petition  by  plaintiff  where  required. 
A  form  of  petition  used  in  the  courts  of  New  York  with 

the  various  parts  numbered  according  to  the  above  schedule  for 
explanation  follows : 

PETITION. 

(1)  SUPREME  COURT,  ONONDAGA  COUNTY 

(2)  John  M.  Laird,  Plaintiff 

vs. 
Insurance  Company,  Defendant 

The  plaintiff  above  named  complaining  of  the 
defendant  above  named  for  a  complaint  herein,  alleges 
and  shows  to  the  Court  on  information  and  belief: 

(3)  (Statements  of  compliance)    ., 

(4)  (Allegations  of  facts) 

(5)  Wherefore,  plaintiff  demands  judgment  against  the 
defendant  for  the  sum  of  Five  Thousand  Dollars  ($5,000) 
with  the  costs  and  expenses  of  this  action. 

(6)  TAFT  &  ROOSEVELT, 

Attorneys  for  Plaintiff, 
Office  and  Post  Address, 

23  Berry  Block, 

Syracuse,    N.   Y. 


141 

(7)    State  oj  New  York         1 
County  of  Onondaga       \ss. 
City  of  Syracuse  J 

John  M.  Laird,  being  duly  sworn,  deposes  and  says 
that  he  is  the  plaintiff  in  the  above  entitled  action;  that 
he  has  heard  the  foregoing  complaint  read  and  knows  its 
contents',  that  the  same  is  true  of  his  own  knowledge, 
except  as  to  those  matters  therein  stated  to  be  alleged  on 
information  and  belief  and  as  to  those  matters  he  believes 
it  to  be  true. 

JOHN  M.  LAIRD. 

Subscribed  and  sworn  to  before  me  this 
23rd  day  of  May,  1915. 
RICHARD  E.   MOORE 
Notary  Public, 

Onondaga   County. 

THE  ANSWER. 

The  answer  is  a  plain  and  brief  statement  of  the  defense 
or  any  counterclaim.    It  is  generally  made  up  of  seven  parts,  viz. : 

1.  The  caption  which  contains  the  name  of  the  Court. 

2.  The  title  which  contains  the  names  of  the  parties. 

3.  The  general  or  specific  denial  of  each  material  allega- 
tion of  the  complaint. 

4.  The  statement  of  any  new  matter  constituting  a  defense 
or  counterclaim. 

5.  The  demand  for  costs  and  damages. 

6.  The  signature  by  either  the  defendant  company  or  its 
attorney. 

7.  Verification  of  answer  where  required. 

A  form  of  answer  used  in  the  courts  of  New  York  with  the 
various  parts  numbered  according  to  the  above  schedule  for 
explanation,  follows: 

ANSWER. 

(1)  SUPREME  COURT,  ONONDAGA  COUNTY. 

John  M.  Laird,  Plaintiff 

(2)  vs. 

Insurance  Company,  Defendant 

The  defendant  for  an  answer  to  the  complaint  herein 
alleges  and  states  as  follows: 

(3)  {General  or  Specific  Denial)... 

(4)  {Statement  of  new  matter).. .. 

(5)  Wherefore    defendant    demands    judgment    that    the 
complaint  herein  he  dismissed  with  costs. 

(6)  RHODES   &  BURDETTE, 

Attorneys  for  Defendant, 
Office  and  Post  Office  Address, 

23  Deniston   Block, 

Syracuse,    N.    Y. 


142 

State  of  New  York        1 
County  of  Onandaga       \ss. 
City  of  Syracuse  J 

(7)  James    H.  McCormick,  being  duly  sworn,  deposes 

says  that  he  is  the  Manager  of  the Insurance 

Company,  the  defendant  in  this  action,  to  wit:    Agent  and 
Manager  of  said  Company  at  Syracuse,  N.  Y.,  that  he  has 
read  the  foregoing  answer  and  knows  the  contents  thereof; 
that  the  same  is  true  to  his  own  knowledge,  except  as  to 
the  matters  therein  alleged  upon  information  and  belief, 
and  that  as  to  those  matters  he  believes  it  to  be  true. 
■  Subscribed  and  sworn  to  before  me 
this  13th  day  of  June,  1915. 

TAMES  H.  Mccormick. 

FRANK  E.  BEL, 

Notary  Public, 

Onondaga   County. 

REPLY. 

A  reply  is  in  a  number  of  states  required  to  be  filed  to  new 
matter  contained  either  in  an  answer  or  counterclaim. 

AMENDMENTS. 

Amendments  to  the  petition  or  answer  may  be  made  in 
proper  time  for  the  purpose  of  adding  names,  striking  out  names, 
adding  denials,  correcting  mistakes,  adding  new  causes  of  action, 
adding  separate  and  distinct  demands,  etc. 

THE  DEMURRER. 

A  demurrer  is  a  form  of  pleading  which  indicates  that  the 
party  filing  it  objects  to  pleading  further  or  introducing  any 
testimony  until  he  obtains  the  judgment  of  the  court  whether 
the  statement  of  facts  made  by  his  adversary  is  such  as  to  require 
him  to  answer  or  proceed  further.  The  principal  reasons  for 
filing  a  demurrer  are : 

1.  The  court  in  which  the  action  is  brought  has  no  juris- 
diction. 

2.  The  plaintiff  has  no  legal  capacity  to  sue. 

3.  There  is  a  defect  of  parties  plaintiff  or  defendant. 

4.  The  petition  does  not  state  facts  sufficient  to  con- 
stitute a  cause  of  action. 

5.  The  petition  is  so  indefinite  and  uncertain  that  the 
defendant  cannot  know  what  plaintiff's  cause  of  complaint  is. 

Arguments  on  demurrers  are  of  very  little  final  importance 
and  as  a  matter  of  fact  the  questions  upon  which  they  are  based 
can  be  raised  at  the  trial. 

A  form  of  demurrer  used  in  a  case  in  Chicago  recently  is 
as  follows: 


143 


DEMURRER. 


State  of  Illinois    \  In  the  Circuit  Court 

County  of  Cook    f^'  of  Cook  County. 

John  M.  Laird  1 

vs.  \Gen.   No.  134628S 

Insurance  Co. [Term  No.  14862 

A  Corporation  of. 

The    defendant Insurance    Company    by 

Rhodes  and  Burdette,  its  attorneys,  comes  and  says  that 
the  plaintiffs  said  declaration  and  each  and  every  count 
thereof  is  insufficient  in  law. 

And  the  defendant  shows  to  the  court  also  the  following 
special  causes  of  demurrer  to  said  declaration,  that  is  to  say: 

1st ..- 

2nd 

Wherefore  the  defendant  prays  the  judgment  of  the 
Court  whether  it  must  answer  further  and  prays  to  he 
dismissed. 

RHODES   &  BURDETTE, 

Attorneys  for  Defendant. 

WHAT  THE  HOME  OFFICE  DOES. 

Having  found  out  who  may  bring  suit  and  defined  some  of 
our  terms  we  proceed  to  inquire  what  the  company  does  when 
the  summons  and  complaint  is  received  at  the  home  office. 

In  the  first  place  the  person  in  charge  of  this  important 
branch  of  the  company's  work  obtains  the  file  of  papers  in  the 
case  and  goes  over  it  very  carefully  and  thus  begins  the  actual 
planning  of  the  defense. 

PLANNING. 

Harrington  Emerson,  the  dean  of  efficiency  experts  in  this 
country,  has  well  said  of  the  value  of  planning  that  *'  The  differ- 
ence between  a  man  who  plans  and  a  man  who  doesnt  plan  is  the 
difference  between  a  man  who  is  forever  getting  into  emergencies 
and  diffcult  situations  trusting  to  luck  or  to  his  ingenuity  to  extricate 
himself  and  the  man,  who,  sitting  quietly  by  himself,  is  able  to 
make  a  mental  picture  of  himself  in  successive  stages  of  his  progress 
for  hours,  days,  months,  or  even  years  ahead,  and  to  so  order  his 
life  that  he  never  finds  himself  face  to  face  with  an  emergency.'' 
I  think  we  can  safely  say  that  it  is  to  avoid  these  very  emergencies 
and  difficult  situations  that  come  sooner  or  later  in  any  law  suit 
that  insurance  companies  plan  very  carefully  as  soon  as  possible 
after  notice  of  suit  what  to  do  when  their  suits  actually  come 
to  trial. 


144 

EQUIPMENT. 

An  important  element  at  the  home  office  in  the  preparation 
of  a  case  for  defense  is  proper  office  equipment  or  the  tools  with 
which  the  person  in  charge  has  to  work.  Much  time  and  energy 
is  wasted  unless  this  equipment  is  efficient  in  every  respect. 
Requirements  vary  so  with  the  different  fire,  life  and  accident 
offices  that  it  is  impossible  to  schedule  standard  equipment  that 
can  be  said  to  be  ideal,  but  the  following  is  a  general  list  of  some 
of  the  things  which  are  necessary  to  an  office  defending  personal 
accident  suits,  a  great  deal  of  which  equipment  is  necessary  to 
the  other  class  of  companies : 

1.  An  up-to-date  Atlas. 

2.  An  unabridged  dictionary. 

3.  A  medical  dictionary. 

4.  A  Lawyer's  directory. 

5.  A  Medical  Examiner's  directory. 

6.  An  encyclopedia. 

7.  A  working  insurance  law  library. 

8.  Manuals  of  Company  rates. 

9.  Manuals  of  Company  Instructions  to  Agents,  etc. 

10.  Book  of  legal  forms,  such  as  assignments,' releases,  etc. 

11.  List  of  Company's  agents  by  state  and  town. 

12  List  of  Company's  attorneys  by  state  and  town. 

13.  List  of  Company's  medical  examiners  by  state  and  town. 

14.  A  calendar  that  gives  best  results  with  least  effort. 

15.  Card  record  of  all  suits  in  process. 

16.  Card  record  of  all  suits  previously  decided. 

17.  Chart  for  computing  weekly  indemnity. 

18.  Chart  for  prorating  a  claim  for  change  of  occupation. 

19.  File  of  Company's  policy  forms,  riders,  etc. 

20.  File  of  all  printed  briefs  used  by  the  company  on  appeal. 

21.  File  of  briefs  on  policy  construction,  etc. 

22.  File  of  pleadings  in  every  suit  brought  against  the 
Company  arranged  according  to  subject. 

23.  File  of  court  decisions  in  Company  cases. 

24.  File  of  miscellaneous  court  decisions. 

25.  File  of  releases  taken  when  suits  are  settled. 

STANDARD  OPERATIONS. 

There  are  certain  standard  operations  which  the  person  in 
charge  of  claims  must  perform  when  he  inspects  the  various 
cases  presented  to  him.  The  first  and  necessary  thing  is  analysis. 
This  must  be  done  as  carefully  and  thoughtfully  as  possible. 
He  must  review  each  case  and  find  out  if  the  policy  was  in 
force  at  the  date  of  the  loss,  if  the  premium  was  paid,  what 
the  correct  amount  of  the  policy  is,  ascertain  if  the  Company 
had  proper  notice  and  proof,  if  the  loss  for  which  indemnity  is 
claimed,  is  covered    by   the  policy,   etc.,    etc.      When  suit  is 


145 

brought  he  must  not  only  again  carefully  review  this  detail 
but  he  must  turn  to  the  summons  and  find  out  if  a  proper 
service  was  made  on  the  company,  investigate  the  status  of 
the  plaintiff,  etc.,  etc. 

ORGANIZATION  OF  THE  DAY. 

The  claim  man  of  an  insurance  company  always  has  a  big 
day  ahead  of  him  with  his  regular  routine  work  added  to  the 
large  amount  of  periodical  and  special  work  that  is  constantly 
coming  in.  It  is  therefore  absolutely  necessary  for  him  to 
organize  his  day  if  big  results  are  desired. 

In  order  not  to  become  narrow  and  restricted  he  must  study 
court  cases  which  have  been  decided  for  and  against  companies 
throughout  the  land  and  he  must  keep  abreast  of  the  insurance 
world  by  reading  insurance  periodicals  and  text  books.  He, 
therefore,  has  many  things  to  do  outside  of  his  regular  routine 
of  reviewing  claims.  One  of  the  best  executives  in  this  country 
has  a  schedule  of  his  daily  operations  always  in  front  of  him  in 
writing  for  the  purpose  he  frankly  admits,  of  adding  interest  to 
his  work  and  to  keep  him  from  procrastinating.  He  says  this 
written  schedule  system  makes  him  accomplish  large  results 
with  little  effort  and  saves  a  great  deal  of  time  he  would  otherwise 
waste.  For  the  insurance  claim  man,  it  is  wise  to  plan  in  a 
similar  way  a  schedule  of  all  the  operations  he  must  perform 
during  the  day  and  then  attend  to  it  that  his  work  is  performed 
as  planned. 

SCHEDULE  OF  HOME  OFFICE  OPERATIONS. 

As  above  indicated  there  are  certain  definite  operations  to 
perform  in  the  handling  of  every  suit.  If  the  person  in  charge 
would  only  schedule  these  operations  in  writing  and  standardize 
every  operation  of  a  suit  from  the  service  or  process  right  through 
to  the  last  act  of  the  case  he  would  save  himself  unnecessary 
work  and  many  useless  blunders.  It  will  pay  to  take  infinite 
pains  and  even  years  of  time  to  standardize  these  important 
operations  and  it  will  be  of  great  benefit  to  you  and  your  company 
if  you  do  this  work. 

It  would  be  impossible  to  set  forth  a  standard  list  of  opera- 
tions to  be  performed  by  the  person  handling  a  law  suit  at  the 
home  office  of  an  insurance  company,  but  here  is  a  schedule  of 
nine  operations  which  must  usually  be  performed  : — 

1.  Inspect  the  summons  and  petition  and  find  out  if  pro- 
per legal  service  was  made. 

2.  Ascertain  if  the  names  of  the  parties  are  correctly  set 
forth.    A  defect  in  this  respect  will  throw  the  case  out  of  court. 

3.  Note  the  court  where  the  action  is  brought  and  if 
desirable  and  permissable,  transfer  it  to  the  Federal  Court. 
Knowledge  of  local  conditions  in  this  connection  is  essential. 


146 

4.  Find  out  when  the  action  is  returnable,  for  if  the  case 
is  not  attended  to  in  a  proper  manner  by  the  return  date  a  judg- 
ment by  default  is  given  the  plaintiff  from  which  no  appeal 
may  be  taken  by  the  Company. 

5.  Review  all  the  facts  in  the  case.  All  papers  in  the 
file  should  be  examined  in  order  that  a  correct  conclusion  may 
be  drawn  as  to  the  question  of  liabiHty.  In  this  connection 
the  examiner  must  not  make  a  lazy  guess.  He  must  not  specu- 
late and  imagine  something  as  true  nor  must  he  make  hasty 
judgments.  He  should  get  right  down  to  the  bed  rock  founda- 
tion facts  by  a  thorough  and  complete  study  and  analysis  of  the 
papers  from  both  the  angle  of  the  plaintiff  and  the  company. 

6.  Decide  on  the  Company's  theory  of  defense.  This 
is  a  most  important  operation  and  in  the  process  cold  logic 
and  reasoning  without  emotion  should  be  employed. 

7.  Select  an  attorney  to  defend  the  case.  This  choice 
should  not  be  made  in  a  hurry.  A  card  index  of  attorneys  that 
have  been  employed  in  previous  cases  segregated  as  to  state 
and  town  will  be  of  great  assistance  in  selecting  an  efficient 
attorney  promptly.  If  the  Company  has  no  attorney  in  or  near 
the  town  where  suit  is  brought  recourse  to  a  large  list  may  be 
made  to  the  general  directories  of  attorneys  in  the  country. 
Among  these  directories  are  Martindale's  American  Law  Dic- 
tionary, Hubbel's  Law  Directory,  Hines'  Insurance  Lawyer's 
Directory,  etc.  The  ratings  in  these  directories  are  carefully 
made  and  usually  reliable. 

8.  Write  out  a  brief  but  complete  history  of  the  case 
giving  attention  to  the  "little  things"  as  well  as  the  larger 
ones,  select  the  important  papers  from  the  file  and  send  them 
and  a  copy  of  the  history  of  the  case  to  the  attorney  together 
with  a  copy  of  the  policy  contract  under  which  suit  is  brought, 
and  the  original  application  for  the  insurance.  It  should  con- 
stantly be  the  plan  of  the  examiner  to  make  short  cuts  for  the 
attorney  in  the  field  by  putting  himself  in  the  attorney's  place, 
later  on  in  the  midst  of  the  real  situation  asking  himself  what 
equipment  he  would  need  and  what  things  he  would  have  to 
perform  when  the  time  for  real  action  came. 

9.  Write  out  definite  instructions  for  the  attorney  selected 
to  defend  the  suit.  Request  him  to  acknowledge  receipt  of  the 
papers  immediately  in  order  that  the  Company  may  know 
its  case  is  being  properly  handled.  Ask  him  to  make  formal 
appearance,  if  necessary  answer  the  summons  in  due  course, 
and  give  the  case  proper  attention.  Also  ask  him  to  send  a 
copy  of  the  complaint  and  answer  to  the  home  office  and  advise 
the  date  of  the  trial  as  soon  as  possible. 


147 

WHAT  THE  ATTORNEY  DOES. 

When  the  attorney  in  the  field  receives  the  file  of  papers 
he  immediately  reviews  the  facts  in  the  case  and  when  necessary 
files  a  formal  appearance  for  the  Company.  He  should  not 
postpone  the  preparation  of  the  defense  but  should  interview 
the  witnesses  as  soon  as  possible.  Ascertaining  the  facts  of 
a  case  is  plain  business  work,  but  for  all  that  it  requires  pro- 
fessional skill  of  high  order. 

It  is  hard  work  to  defend  any  law  suit,  and,  as  an  able 
lawyer  has  well  said : 

''It  is  the  midnight  oil  that  counts,  the  painstaking, 
thoughtful,  thorough  preparation,  the  accurately  drawn 
trial  brief,  clearness  in  expression,  the  art  of  putting 
things,  —  and  not  luck   that  wins  cases.'' 

Before  inquiring  critically  into  a  case  the  attorney  examines 
the  pleadings  of  the  plaintiff  to  ascertain  if  the  action  was  not 
brought  prematurely,  if  the  plaintiff  has  performed  all  condi- 
tions required  by  the  policy,  if  there  are  any  defects  or  irregu- 
larities in  the  process  or  service  or  pleadings,  the  capacity  of 
the  plaintiff  to  sue,  his  interest  in  the  policy,  etc.  If  depositions 
are  necessary  they  should  be  taken  at  the  earliest  possible 
moment.  Affidavits  cannot  be  used  without  inconvenience. 
Some  attorneys  are  so  busy  that  they  don't  give  ordinary  atten- 
tion to  such  details  until  too  late  and  oftentimes  lose  out  where 
they  should  have  won  easily  if  they  had  properly  planned  the 
case  in  the  first  place. 

ASCERTAINING  THE  LAW. 

The  work  of  running  down  the  law  whether  the  search  is 
for  principles  or  authorities  is  by  no  means  easy.  The  search 
for  precedents  consists  of  finding  a  case  similar  to  the  case  under 
investigation  and  then  to  find  all  the  other  cases  in  one  or  all 
jurisdictions  involving  the  same  principle. 

The  law  is  found  in  two  repositories,  viz : 

1.  Statutes,  including  constitutions  and  the  general  and 
special  acts  of  lawmaking  bodies,  such  as.  Congress  and  the 
State  legislatures. 

2.  Decisions  of  the  courts. 

In  an  action  at  law  we  have  to  do  (1 )  with  statutes  as  to  the 
service  of  process  and  the  rules  of  procedure  in  court  (which 
latter  differ  very  materially  in  the  various  states  and  jurisdic- 
tions) and  (2)  with  previous  decisions  of  the  courts  on  the  same 
question  or  questions  analogous  to  the  one  at  issue. 

Court  decisions  are  reported  in  what  is  known  as  an  official 
series  and  a  non-official  series.  In  the  official  series  the  reporter 
or  the  person  who  prepares  the  decision  for  printing  is  an  officer 
of  the  court  and  the  decisions  are  printed  with  the  sanction 


148 

and  under  the  supervision  of  the  court.  The  official  series  in- 
cludes the  United  States  Supreme  Court  Reports  and  the  United 
States  Circuit  Court  of  Appeals  Reports,  and  the  various  official 
State  Reports.  The  non-official  reports  are  published  by  pri- 
vate companies  and  include  the  Federal  Reporter,  the  Atlantic 
Reporter,  Northeastern  Reporter,  Northwestern  Reporter,  Pacific 
Reporter,  Southeastern  Reporter,  Southern  Reporter  and  South- 
western Reporter,  published  by  the  West  Publishing  Company 
of  St.  Paul,  Minn.,  etc. 

The  mode  of  citation  generally  employed  is  the  abbrevia- 
tions of  the  various  volumes  cited,  the  volume  number  being 
given  first  and  the  page  number  following  the  name  of  the  state. 
For  instance,  23  Conn.,  13  means  Volume  23  of  the  Connecticut 
Supreme  Court  of  Errors  Reports,  Page  number  13  or  23  N.  W. 
13  means  Volume  23,  Northwestern  Reporter,  Page  number  13. 

Besides  statutes  and  court  decisions  there  are  certain  text 
books  and  digests  which  set  forth  the  law  of  a  subject  in  con- 
densed form  with  more  or  less  criticism ;  there  are  encyclopedias 
of  law  which  attempt  to  cover  the  entire  body  of  the  law,  such 
as  Corpus  Juris,  Cyclopedia  of  Law  and  Procedure,  Ruling 
Case  Law,  the  American  and  English  Encyclopedia  of  Law 
and  Practice,  etc.  There  are  law  dictionaries  such  as:  Words 
and  Phrases  Judicially  defined,  Black's  Law  Dictionary,  Bou- 
vier's  Law  Dictionary,  etc.  There  are  law  periodicals  such  as: 
The  Yale  Law  Journal,  Harvard  Law  Review,  the  Michigan 
Law  Review,  the  Insurance  Law  Journal,  etc.  In  relation 
especially  to  insurance  there  are  Cooky's  Briefs  on  the  Law 
of  Insurance,  Finch's  Insurance  Digest,  Bacon  on  Insurance, 
May  on  Insurance,  Kerr  on  Insurance,  Bliss  on  Accident  Insur- 
ance, Fuller  on  Accident  Insurance,  Deitch's  Insurance  Digest, 
Richards  on  Insurance,  etc.,  etc. 

ATTORNEY'S  BRIEF. 

The  results  of  a  careful  and  thorough  study  of  the  facts 
and  law  of  the  case  should  be  embodied  in  a  trial  brief  for  the 
guidance  of  the  attorney  at  the  trial.    The  brief  should  include: 

(1)  An  abstract  of  the  pleadings.   • 

(2)  A  schedule  of  facts  to  be  proved  with  names  of  wit- 
nesses by  whom  proof  can  be  made. 

(3)  A  synopsis  of  the  facts  to  be  proved  by  the  plaintiff. 

(4)  A  preliminary  draft  of  advisable  instructions  for  the 
jury  with  references  to  the  authorities  upon  which  the  instruc- 
tions are  based. 

THE  TRIAL. 

The  issues  made  by  the  pleadings  are  usually  triable  by 
jury.  The  trial  is  presided  over  by  a  judge  who  rules  upon 
objections  of  the  attorneys  to  evidence  and  instructs  upon  the 


149 

law  and  aids  the  jury  by  explaining  and  commenting  on  the 
evidence. 

After  the  court  is  in  session  and  the  case  to  be  tried  is 
formally  announced  motions  are  in  order,  the  most  usual  of 
which  is  a  motion  to  postpone.  This  motion  is  generally  made 
on  the  ground  that  a  party  is  absent,  counsel  is  absent,  a  wit- 
ness is  absent,  or  there  is  absence  of  documentary  evidence. 

Besides  motions  to  postpone,  motions  on  the  pleadings  may 
be  made  as  for  instance,  a  motion  to  dismiss  on  the  ground  that 
the  defense  is  admitted  in  the  pleadings,  a  motion  to  strike  out 
irrelevant,  redundant  and  other  improper  matter,  or  a  motion 
to  make  the  petition  more  definite  and  certain. 

If  the  court  refuses  to  grant  the  motions,  exceptions  are 
taken  for  review  of  a  higher  tribunal  if  an  appeal  is  taken  and 
the  case  proceeds,  the  first  act  being  the  selection  of  a  jury  to 
try  the  case. 

Each  person  called  to  the  jury  box  is  challenged  by  the 
attorneys  for  the  plaintiff  and  defendant.  The  principal  grounds 
of  challenge  are : 

1.  Prior  service  as  juror  in  the  same  action. 

2.  Interest  of  the  juryman  in  the  result  of  the  action. 

3.  Blood  or  business  relationship  of  the  juryman  to  any 
of  the  parties. 

4.  Prejudice  of  the  juryman  against  the  business  or  calling 
of  either  party. 

Besides  these  challenges  each  side  has  a  certain  number  of 
peremptory  challenges  depending  on  the  statutes  of  the  juris- 
diction where  the  case  is  tried.  When  the  jury  is  finally  selected 
it  is  sworn  in  by  the  clerk  of  the  court. 

WITNESSES. 

Attorneys  are  not  allowed  to  present  the  facts  in  the  case 
directly  to  the  jury.  Each  attorney  is  permitted  and  required 
to  put  on  witnesses  to  tell  their  story  and  it  is  through  them 
the  attorney  speaks. 

The  importance  of  properly  selecting,  training  and  pre- 
senting witnesses  is  often  overlooked  by  the  attorneys  and  put 
off  to  the  last  minute  and  then  rushed  through  quickly,  and 
usually  at  the  sacrifice  to  the  defending  company.  A  large 
number  of  witnesses  do  not  in  themselves  indicate  strength. 
What  they  say  and  the  way  they  say  it  is  what  counts.  A  great 
lawyer  has  made  this  statement  concerning  a  witness: 

''A  witness  is  a  weapon  with  whom  shot  and  shell 
are  to  be  hurled  against  a  foe;  a  rifled  cannon  when 
his  evidence  is  prompt  and  positive;  a  wretched  pop 
gun  provoking  contempt  for  the  whole  battery  when  his 
words  are  hesitating  or  his  purpose  weak.'' 


150 

All  witnesses  must  be  shown  to  be  competent  and  expert 
witnesses  must  qualify  as  such  to  the  satisfaction  of  the  court 
before  they  may  testify. 

QUALIFICATIONS  OF  WITNESS. 

There  are  certain  qualifications  which  a  witness  should 
have,  among  which  are  the  following: 

1.  A  clear  "and  precise  conception  of  the  facts.  If  his  ideas 
are  confused,  what  he  testifies  to  will  not  carry  much  weight 
with  the  jury. 

2.  A  knowledge  of  the  issue. 

3.  A  good  appearance  and  pleasing  manner. 

4.  The  ability  to  speak  out  clearly  and  with  feeling  so 
that  the  jury  may  hear  and  understand. 

5.  An  even  temper.  He  must  be  taught  not  to  lose  his 
head  when  the  attorney  for  the  other  side  is  endeavoring  to  tear 
up  his  testimony  by  cross  examination.  The  clever  witness, 
the  rambling  witness,  the  dull  and  stupid  witness,  must  all  be 
met  with  in  the  trial  of  a  case  and  handled  by  different  methods 
and  therefore  they  must  be  properly  trained  or  their  testimony 
will  avail  nothing. 

In  order  to  stage  the  case  in  the  best  manner  the  attorney 
must  ascertain  the  number  of  witnesses  and  must  place  them  in 
the  best  logical  order  for  the  purpose  of  his  case. 

The  questions  to  be  asked  the  witness  should  be  carefully 
studied  before  the  trial  and  no  question  should  be  asked  without 
an  object.  The  questions  should  be  within  the  comprehension 
of  the  jury  and  as  an  attorney  psychologist  has  said,  should  be 
arranged  to  (1)  enlist  the  attention  of  the  jury  and  (2)  to  en- 
lighten them,  and  (3)  to  persuade  them. 

RIGHT  TO  OPEN  AND  CLOSE. 

The  burden  of  proof  under  an  insurance  policy  usually 
rests  with  the  plaintiff  and  consequently  that  party  generally 
has  the  right  to  open  and  close  the  case. 

THE  OPENING. 

The  object  of  an  opening  is  to  state  briefly  to  the  court 
and  jury  the  nature  of  the  action,  the  substance  of  the  plead- 
ings, the  points  at  issue,  the  facts,  and  the  substance  of  the 
evidence  counsel  is  about  to  produce.  Generally  counsel  for 
defendant  does  not  open  his  defense  until  plaintiff's  evidence 
has  been  heard  and  plaintiff  rested. 

ORDER  OF  PROOF. 

Each  side  must  finish  his  case  in  turn.  If,  after  the  plaintiff 
has  offered  all  his  evidence  the  defendant  demurs  to  such  evi- 
dence on  the  grounds  that  he  has  not  proved  the  facts  alleged, 


151 

or  because  the  facts  alleged  and  proved  do  not  entitle  the  plain- 
tiff to  a  judgment,  and  the  demurrer  is  sustained,  the  court 
immediately  directs  the  jury  to  bring  in  a  verdict  for  the  defend- 
ant unless  the  plaintiff  will  take  a  non  suit. 

EXCEPTIONS. 

Questions  of  law  constantly  arise  during  the  trial,  as  to 
the  admissibility  of  evidence  which  the  judge  must  pass  upon. 
If  either  attorney  objects  and  desires  to  have  the  matter  reviewed 
by  a  higher  court  he  must  immediately  at  the  time  the  ruling  is 
made,  file  what  is  known  as  an  exception  to  the  ruling  of  the  judge. 

EXHIBITS. 

If  there  are  any  exhibits  to  be  offered  they  should  be  prop- 
erly arranged  and  presented  at  the  right  time  and  in  a  correct 
manner  or  they  will  not  have  the  desired  effect  on  the  jury. 

Plaintiff's  exhibits  in  insurance  cases  usually  include  such 
instruments  as  the  Original  Policy,  the  Application,  the  Renewal 
Receipts,  Certificates  of  Attending  Physician,  Notice  of  Loss, 
and  Proof  of  Claim,  Letters  from  the  Company,  etc. 

The  Company's  exhibits  include  such  as  Medical  and  Scien- 
tific books.  Photographs,  X-Ray  Photographs,  Maps,  Charts, 
Diagrams,  Surveys,  etc.,  etc. 

TO  THE  JURY. 

When  all  the  questions  of  law  and  fact  have  been  brought 
out,  each  party  is  entitled  to  sum  up  to  the  jury.  As  soon  as 
this  is  finished  the  court  gives  its  instructions  to  the  jury. 

It  is  the  duty  of  the  judge  to  explain  the  issues  to  the  jury 
and  instruct  it  in  the  legal  principles  involved.  He  usually 
defines  the  terms  and  phrases  of  the  policy  contract.  The  attor- 
neys should  be  ready  with  prepared  instructions  in  writing 
which  they  should  request  the  judge  to  make  to  the  jury,  and, 
failing  to  grant  the  request  make  proper  exceptions. 

Where  the  facts  are  unco ntro verted  and  the  inferences 
are  clear  it  is  for  the  judge  to  decide  the  questions  at  issue. 

Where  the  question  resolves  itself  into  one  of  fact,  the  case 
goes  to  the  jury.  The  jury  retires  to  the  jury  room  at  the  direc- 
tion of  the  judge  and  after  due  deliberation  arrives  at  a  verdict. 

THE  VERDICT. 

The  verdict  is  the  decision  of  the  jury  upon  the  issue  pre- 
sented. It  is  usually  ''jor  the  plaintiff'  or  ''for  the  defendant.'' 
When  the  verdict  is  awarded  it  contains  the  amount  of  damages. 

The  duty  of  the  clerk  of  the  court  after  the  verdict  is  formally 
reported  in  court,  is  to  record  it  in  a  book  provided  for  that 
purpose.  The  rendition  of  the  judgment  is  an  act  of  the  court 
which  none  but  the  judge  can  perform. 


152 

PROCEEDING  AFTER  VERDICT. 

Motions  to  set  aside  the  verdict  or  for  a  new  trial  by  the 
unsuccessful  party,  are  usual  after  the  verdict  has  been  an- 
nounced. 

A  form  of  judgment  used  in  New  York  State  is  as  follows : 

JUDGMENT. 

(1)  SUPREME  COURT,  ONONDAGA  COUNTY. 

John  M.  Laird,  Plaintiff 

(2)  vs. 

Insurance  Company,  Defendant 

Judgment  of  the  23rd  day  of  September,  1915. 

This  cause  having  been  commenced  by  the  personal 
service  of  the  summons  and  complaint  upon  the  defendant, 
and  the  defendant  having  appeared  and  answered,  and  the 
same  having  been  upon  the  General  Calendar  of  a  term  of 
the  Supreme  Court  commenced  at  the  Court  House  in  the 
city  of  Syracuse,  N.  Y.,  in  and.  j or  the  County  of  Onon- 
daga, with  the  Hon.  David  R.  Woodhouse,  Justice  pre- 
siding and  a  jury,  and  same  having  been  regularly  placed 
on  the  Day  Calendar,  moved  and  reached  in  its  regular 
order,  and  after  a  trial  of  the  issues  and  due  deliberation 
had  thereon,  the  jury  having  herein  found  in  favor  of  the 
plaintiff  and  against  the  defendant  in  the  sum  of  Five 
Thousand,  Six  Hundred  and  Twenty-three  Dollars 
{$5,623)  damages,  and  the  plaintiffs  costs  and  disburse- 
ments having  been  herein  taxed  by  the  Clerk  of  the  Court 
of  the  County  of  Onondaga,  at  Six  Hundred  and  Forty 
Dollars  {$6^0). 

Now,  on  motion  of  Taft  and  Roosevelt,  attorneys  for 
the  plaintiff,  it  is 

Adjudged,  that  the  plaintiff,  John  M.  Laird,  recover 

of  and  have  judgment  against  the  defendant... 

Insurance  Company,  for  the  sum  of  $5,623  damages  to- 
gether with  $640,  costs  and  disbursements,  as  taxed, 
in  all,  the  sum  of  $6,263,  and  that  he  have  execution  thereof. 

L.  G.  WADSWORTH,   Clerk 

APPEAL. 

If  the  motions  to  set  aside  the  verdict  or  for  a  new  trial 
are  denied,  what  is  known  as  an  appeal  is  usually  taken  if  allow- 
able. 

An  appeal  is  a  method  of  revising  a  definite  judgment.  It 
is  a  transfer  of  jurisdiction  from  one  court  to  one  of  superior 
jurisdiction  for  the  purpose  of  obtaining  a  review  and  a  new 
trial.  This  appeal  must  be  taken  within  a  limited  time.  A  bond 
is  required  by  which  the  party  appealing  binds  himself  to  pay 
damages  and  costs  if  he  fails  to  prosecute  the  appeal  with  effect. 


153 

A  form  of  appeal  notice  is  as  follows : 
NOTICE  OF  APPEAL. 

(1)  SUPREME  COURT,  ONONDAGA  COUNTY. 

John  M.  Laird,  Plaintiff 

(2)  i^s. 

Insurance  Company,  Defendant 

Sirs:      Take  notice  that  the  defendant, 

Insurance  Company,  hereby  appeals  to  the  Appellate  Divi- 
sion of  the  Supreme  Court,  Fourth  Judicial  Department 
from  the  judgment  of  the  Supreme  Court,  Onondaga 
County,  N.  Y.,  entered  in  the  office  of  the  Clerk  of  the 
County  of  Onondaga,  on  the  first  day  of  June,  1915,  in 
favor  of  the  plaintiff  and  against  the  defendant  for  the  sum 
of  Five  Thousand  Dollars  ($5,000),  and  from  each  and 
every  part  of  said  judgment  and  also  from  an  order 
entered  in  said  Clerk's  office  on  the  twenty-first  day  of 
May,  1915,  denying  a  motion  to  set  aside  the  verdict 
and  for  a  nevu  trial  of  the  said  action  and  from  each  and 
every  part  of  said  order. 

The  appellant  intends  to  bring  up  for  review  upon 
said  appeal,  each  and  every  part  of  said  judgment,  all 
questions  of  law  and  fact  involved  therein  and  the  excep- 
tions taken  by  the  defendant  upon  the  trial  of  this  action. 
Dated  at  Syracuse,   N.  Y.,  October  13,  1915. 

RHODES   &  BURDETTE, 

Attorneys  for  Defendant. 
Office  and  Post  Office  Address, 

23  Deniston   Block, 
Syracuse,    N.    Y. 
To  Taft  &  Roosevelt,  Attorneys  for  Plaintiff , 

RICHARD  W.   DeLAMATER, 

Clerk  of  Onondaga   County. 

BRIEFS  ON  APPEAL. 

The  full  testimony  in  the  lower  court  is  generally  required 
to  be  printed  and  sent  up  to  the  higher  court  together  with  a 
printed  brief  of  each  party  to  aid  the  appellate  court  in  reaching 
g,  decision. 

The  brief  of  each  party  should  contain  the  name  of  the 
court  in  which  the  brief  is  to  be  used,  and  the  name  of  all  the 
parties.  A  preliminary  statement  is  required  to  show  in  what 
court  the  action  was  commenced,  what  relief  was  sought,  the 
defense,  the  verdict  of  the  lower  court  and  the  reason  for  bring- 
ing it  to  the  appellate  court.  Each  brief  should  contain  a  con- 
cise statement  of  the  case  and  the  appellant  must  specify  the 
errors.  The  brief  of  argument  must  consist  of  the  points  of  law 
or  fact  and  citations  of  authorities  relied  upon  in  support  of 
the  case. 


154 

A  form  of  a  brief  is  as  follows : 

SUPREME  COURT. 
APPELLATE  DIVISION,  TENTH  DEPARTMENT. 

John  M.  Laird,   Respondent 
vs. 
Insurance  Company,  Appellant 

Point      I 

Point     II 

Point  III 

For  the  reasons  above  stated  and  other  manifest  errors 
oj  the  trial  Court,  not  herein  specifically  enumerated, 
the  judgment  should  be  reversed  and  a  new  trial  ordered. 

RHODES   &  BURDETTE, 

Attorneys  for  Appellant. 
Office  and  Post  Office  Address, 

23  Deniston   Block, 
Syracuse,    N.    Y. 

FINAL  DECISION. 

When  the  day  assigned  for  argument  before  the  higher 
court  arrives  each  party  is  present  and  presents  its  printed  briefs, 
a  copy  of  the  record  of  the  lower  court  and  makes  oral  argument. 
The  court  takes  the  case  under  consideration  and  finally  issues 
its  decision  and  the  decision  is  duly  reported  in  the  official  record 
of  the  court.     A  complete  record  of  a  decision  consists  of: 

1.  The  name  of  the  parties,  with  their  titles. 

2.  A  syllabus,  or  what  is  known  as  a  headnote  in  which 
the  reporter  makes  a  condensed  statement  of  the  case. 

3.  The  names  of  the  attorneys  and  sometimes  their  argu- 
ments in  short. 

4.  The  opinion  of  the  court. 

5.  Any  concurring  or  dissenting  opinion. 

PAYMENT  OF  JUDGMENT. 

If  the  final  judgment  is  in  favor  of  the  plaintiff  and  against 
the  company,  the  latter  must  pay  up  or  it  will  have  the  sheriff 
walking  in  and  taking  some  of  its  property  to  satisfy  the  debt. 
The  amount  is  usually  paid  to  the  attorneys  for  the  plaintiff 
and  costs  paid  to  the  clerk  of  the  court. 

If  the  final  judgment  is  in  favor  of  the  company  the  plain- 
tiff must  pay  all  costs  which  most  always  amount  to  a  consid- 
erable sum. 

A  judgment  of  a  court  of  record  which  is  docketed  in  the 
proper  officials'  office  is  for  a  certain  number  of  years  a  lien 
upon  the  debtor's  real  estate  and  personal  property. 


155 

CONCLUSION. 

I  realize  I  have  not  covered  all  of  the  story  of  a  law  suit, 
but  I  hope  what  I  have  given  you  will  encourage  you  to  investi- 
gate further  into  this  fascinating  subject.  The  valuable  part  of 
this  course  of  lectures  is  not  the  cold  facts  you  obtain  out  of 
any  one  of  them,  but  the  inspiration  you  acquire  to  study 
further  for  yourselves  the  details  of  your  calling  and  thus  add 
greater  interest  to  your  work.  Reading  or  listening  to  this 
course  of  lectures  is  not  study.  Knowledge  of  any  subject  is 
not  possible  without  study.  In  closing  therefore,  I  commend 
to  you  a  thorough  review  and  study  of  this  course  by  yourselves. 
Don't  simply  scan  what  has  been  written  but  dig  out  the 
knowledge  that  has  been  given  you  and  so  apply  it  to  your 
everyday  work  that  you  will  be  more  valuable  to  the  company 
that  employs  you.  If  you  do  this  you  will  possibly  have  the 
advantage  over  the  man  who  has  not  pursued  this  course  of 
lectures  in  the  right  way.     At  all  events  it's  worth  the  "try". 


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